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Digitized  by  the  Internet  Archive 

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http://www.archive.org/details/briefonlegalaspeOOrandrich 


BRIEF  ON   THE  LEGAL  ASPECTS  OF 

SYSTEMATIC    COMPENSATION 

FOR  INDUSTRIAL  ACCIDENTS 


CARMAN    F.   RANDOLPH 

ii 


KP.;r 


GIFT 


ANALYSIS. 

Inteoduction. 

PAKT  ONE. 

Employees'    Liability. 

PAGE 

Employees'  Liability  LegislatiojI 3 

Legislative  Powee 6 

Fedeeal  Legislation 10 

Conclusions 13 

PAKT   TWO. 

Systematic  Compensation. 

L — CoMPULSOEY  Compensation 15 

FoEEiGN  Compensation  Laws 16 

Employments  coveeed 17 

Injueies  compensated 19 

Who  eeceive  compensation 21 

Who  pay  compensation -  22 

As  TO  exclusion  of  law  suits 23 

Substitution  of  voluntaey  scheme 25 

The  compensation 25 

Claims  foe  compensation  and  settlement  of  dis- 
putes    28 

Insueance 30 

State  insueance 31 

Employee's  insueance 32 

Beetish  system 32 

Continental  systems 33 

yoluntaey 33 

compulsoey 35 

The  Geeman  associations 36 

Peemissive  insueance 44 

Inteenational  Questions 44 

Paeties  to  Administeation 46 

Keview  of  Foeeign  Laws 48 


239414 


FAGB 

ii.  — generaii  considbrations  on  compuiisort  compensation .  .  50 

Origin— The  German  System 50 

Arguments  for  Compulsory  Compensation 54 

Modern  Hazards 54 

Industry  Should  Beak  the  Cost  of  Accident 55 

Status  of  Compensation  Laws 57 

Effects  of  Compensation  Laws 62 

Measure  and  cost  of  relief 62 

Litigation 64 

AcciDFjJT  rate 65 

Effect  on  workmen , 67 

General  results 72 

III. — Compulsory  Compensation  in  the  United  States 73 

Eecent  laws 73 

Function  and  powers  of  government  81 

Taxation  or  police  power  ? 82 

Legislative  jurisdiction 83 

Are  there  precedents  for  compulsory  compensa- 
tion?     85 

Status  and  theory  of  compulsory  compensation 87 

Master  and  Servant 92 

Masters'  responsibility 92 

Workmen's  co-operation 102 

Insurance ;  . : 104 

Company 104 

Government 106 

Employer's  associations  ..... .:..... 106 

Equal  Protection  of  the  Laws 109 

Settlement  of  Claims , 118 

International  and  Interstate  Questions 123 

The  Compensation  Rate 126 

General  Conclusions  . . . :    128 

IV. — V<HiUNTARY  Compensation 131 

General  Conclusions 140 


Brief  on  the  Legal  Aspects  of  Systematic  Compensa- 
tion for  Industrial  Accidents. 


INTRODUCTION. 

Systematic  compensation  for  victims  of  industrial 
accident  lias,  during  the  past  generation,  been  instituted 
by  most  civilized  states  one  after  another,  beginning  with 
Germany  in  1884. 

Until  the  other  day  the  United  States  took  little  in- 
terest in  this  movement.  To-day  systematic  compensation 
is  widely  discussed;  and  it  is  being  investigated  by  a 
federal  commission,  by  commissions  in  Wisconsin,  New 
Yorky  Minnesota,  Ohio,  Massachusetts,  New  Jersey  and 
Illinois,  and  by  labor  bureaus,  trade  unions  and  civic, 
industrial,  legal,  ecclesiastical  and  insurance  bodies. 

Three  compulsory  compensation  laws  of  limited  scope 
have  already  been  passed — the  Montana  and  the  Mary- 
land acts  of  1909  and  1910,  creating  an  accident  and  dis- 
ability fund  for  coal  miners,  taking  effect  respectively 
October  1,  1910,  and  May  1,  1910;  the  New  York  Act  of 
1910,  to  amend  the  labor  law  in  relation  to  workmen's 
compensation  in  certain  dangerous  employments,  taking 
effect  September  1,  1910, — and  plans  are  presaged  in 
great  variety. 

A  number  of  employers  in  various  branches  of  indus- 
try, desiring  consideration  of  the  legal  aspects  of  the 
subject,  and  not  unmindful  of  the  possibility  of  inconsid- 
erate legislation,  have  retained  me  to  prepare  a  brief  on 
the  enlargement  of  workmen's  indemnity  for  accident  be- 
yond the  limits  set  by  the  common  law,  and  especially 
enlargement  along  the  line  of  systematic  indemnity  as 
distinguished  from  a  broadening  of  the  range  of  suits  for 
damages — workmen's  compensation  as  distinguished  from 
employers'  liability. 

My  clients  have  not  organized  to  retain  me,  nor  is 
there  among  them  a  trade  association.  Each  acts  on  its 
own  motion,  deals  with  me  independently  and  is  entitled 


to  use  the  brief  at  discretion.  None  is  responsible  for, 
mncli  less  committed  to  any  views  or  suggestions  ex- 
pressed in  the  brief. 

The  compensation  system,  whereby  a  workman  re- 
ceives for  any  industrial  accident  an  indemnity  pre- 
scribed by  schedule,  is  a  foreign  and  a  comparatively  re- 
cent invention.  Its  principle  is  strange  to  our  institu- 
tions. Comprehension  of  the  foreign  laws  and  their 
workings  is  not  yet  widely  diffused  here  even  among 
ardent  advocates  of  their  principle.  Indeed,  English 
translations  of  the  principal  European  laws  were  not 
available  until  about  a  year  ago — being  then  published 
by  our  Department  of  Commerce  and  Labor. 

This  important  and  novel  subject,  so  closely  affiliated 
with  other  foreign  social  insurance  schemes,  still  more 
important  and  even  less  widely  understood,  the  Ameri- 
can people  are  pressed  to  consider,  not  only  with  defer- 
ence to  the  directions  of  our  constitutional  law,  but,  if 
lawful  opportunities  are  to  be  wisely  exploited,  with  that 
sober  and  discriminating  judgment  so  peculiarly  needed 
in  the  initial  handling  of  a  far-reaching  question. 

"Every  man,"  said  Francis  Place,  the  "radical  tailor," 
who  played  so  influential  a  part  in  English  reform  in 
the  earlier  half  of  the  last  century:  "Every  man  who 
"greatly  desires  the  well-being  of  his  species  «  *  * 
"has  no  doubt  felt  ♦  ♦  ♦  repugnance  *  *  *  at 
"finding  himself  compelled  to  abandon,  as  it  were,  the 
"notions  he  would  fain  indulge  without  alloy,  and  to 
"descend  to  calculations  and  comparisons  of  losses  and 
"gains,  of  trade,  commerce  and  manufactures,  of  the  na- 
"ture  of  rent,  profits  and  wages,  the  accumulation  of 
"capital,  and  the  operation  of  taxes.  But  he  who  would 
"essentially  serve  mankind  has  no  choice;  he  must  submit 
"himself  patiently  to  the  pain  he  cannot  avoid  without 
"abandoning  his  duty."^ 

^Wallas'  Life  of  Place,  p.  157. 


8 

PAKT  ONE. 
EMPLOYERS'  LIABILITY. 

A  brief  consideration  of  the  law  of  employers'  lia- 
bility for  accidents  is  advisable  not  only  for  its  intrinsic 
interest  but  to  compare  it  with  the  new  proposals  for 
systematic  compensation  and  to  indicate  their  point  of 
departure. 

For  the  American  workman  an  action  for  damages  common  law. 
against  the  master  is,  at  present,  the  only  established 
form  of  redress  for  an  injury  suffered  in  the  course  of 
employment,  and  we  remark,  in  this  relation,  that  the 
shortcomings  of  the  common  law  in  denying  a  right  of 
action  to  the  heirs  of  a  servant  killed  outright  has  long 
been  cured  by  statute. 

The  common  law  holds  the  master  liable  only  when 
the  accident  is  due  to  his  fault  or  neglect.  It  exonerates 
him  when  the  workman's  negligence  contributed  to  the 
accident,  when  the  accident  is  laid  to  a  risk  of  the  employ- 
ment supposedly  assumed  by  the  workman,  or  when  it 
is  due  to  the  act  of  a  fellow  servant. 

This  summary  statement  of  common  law  principles 
gives  no  hint  of  the  familiar  complexities  and  inequalities 
incident  to  their  application;  and,  without  enlarging 
upon  these  we  shall  show  by  an  illustrative  but  not  ex- 
haustive citation  of  statutes  how  far  the  principles  have 
been  modified  by  legislation. 

employers'  liability  acts. 

The  defence  of  contributory  negligence  has  been  abol-  Negligence. 
ished  by  certain  legislatures  when  the  master's  neglect 
of  statutory  safety  requirements  contributed  to  the  acci- 
dent.2 

A  rule  of  comparative  negligence  which  holds  the 
master  liable  where  his  neglect  is  grave  in  comparison 

^See,  for  example,  Federal  Employers'  Liability  Act,  §  4. 


Assumption 
of  risk. 


Fellow 
senrant. 


with  the  servant's  has  been  enacted  by  certain  legisla- 
tures.^ 

The  Federal  Employers'  Liability  Act  of  1906,  now 
superseded,  provided,  "All  questions  of  negligence  and 
contributory  negligence  shall  be  for  the  jury,"  and  a  like 
provision  obtains  in  certain  States.* 

The  common  law  rule  that  a  workman  assumes  the 
general  risks  incident  to  whatever  trade  he  enters  is 
qualified  by  the  Federal  Employers'  Liability  Act  of  1908, 
"when  the  violation  by  a  common  carrier  of  any  statute 
enacted  for  the  safety  of  employees  contributed  to  the 
injury  of  such  employee,"  and  in  certain  States  the  rule 
is  qualified  where  the  accident  occurs  through  a  defect  in 
machinery,  etc.,  of  which  the  victim  had  given  notice.^ 

Coming  to  the  fellow  servant  rule,  which  is  really  a 
special  application  of  the  assumption  of  risk  doctrine,  we 
note,  first,  that  the  British  Employers'  Liability  Act  of 
1880  modified  it  by  making  an  employer  liable  for  the 
neglect  of  his  superintendents,  etc. 

This  "vice-principal  rule,"  as  it  has  been  aptly  called, 
had  already  been  adopted  in  some  of  our  States  in  respect 
of  railways,  and  it  is  has  been  considerably  extended. 

In  certain  States  it  is  prescribed  for  all  employments  f 
for  railroad  and  mining  operations  ;'^  for  railroads  exclu- 
sively;^ for  mines  exclusively.® 

In  the  following  jurisdictions  the  fellow  servant  rule 
has  been  abolished  in  respect  of  all  the  servants  of  rail- 


3See,  for  example,  Indiana,  1901,  §  3520;  Georgia  Code,  §  3026; 
see  also  Fed.  Emp.  Liability  Act  1908;  Ohio,  Apr.  30,  1910;  Mich., 
1909,  C.  104. 

*See  Ohio,  Apr.  30,  1910;  N.  J.,  1909,  C.  83. 

»Iowa,  1907,  C.  161;  Ohio,  1904,  p.  647;  Texas,  1905,  C.  163. 

«Ala.  Code,  1901,  §  8910;  Colo.  Ann.  Stat.,  1511a;  Conn.  Gen. 
Stat.,  1902,  §  4702;  Mass.  Eev.  Laws,  1902,  §  71;  N.  Y.,  1902,  C.  600, 
§  1;  Ohio  Ann.  Stat.,  §  3365;  Pa.,  1907,  C.  329;  Utah  Comp.  Laws, 
1907,  §§  1342-3. 

^Nev.,  1907,  C.  215,  §  1. 

8Ind.  Ann.  St.,  §  7083;  Va.  Const.,  102. 

»Md.  Code,  §  195a. 


way  companies  who  are  engaged  in  the  work  of  trans- 
portation^^ and  in  respect  of  railways  and  mines.^^ 

The  most  radical  fellow  servant  statute  is  the  Maine 
law  of  1909  "relating  to  the  employment  of  labor,"  and 
abolishing  the  fellow  servant  rule  for  all  employees  ex- 
cept domestic  servants,  farm  laborers  and  lumbermen. 
We  note,  however,  a  Colorado  statute  embracing  all  em- 
ployees.^ ^  The  principle  of  this  act  was  sustained  in  the 
case  of  a  mining  company,^ ^  but  the  act  was  later  declared 
inoperative  because  of  a  defect  in  its  passage. ^^ 

The  above  legislation  is  not  very  far-reaching.  A  scope  of 
number  of  States  leave  the  master's  common  law  defences 
almost  if  not  quite  intact.  And  no  State  has  qualified  any 
of  them  for  all  masters.  Invariably  are  certain  employers 
selected,  and  the  selective  process  proves  that  the  princi- 
ple of  the  defences  is  not  impugned,  else  would  they  be 
taken  away  from  the  small  employer — farmer,  house- 
holder, shopkeeper  and  the  like. 

Furthermore,  while  the  hazard  of  the  work  usually 
suggests  the  principle  of  selection,  actual  selection  is 
mainly  confined  to  the  operation  of  railways.  In  short, 
the  assumed  ability  of  railway  companies  to  pay  damages 
largely  defines  the  range,  if  it  does  not  avowedly  give  the 
reason  of  the  statutes.  And  this  discrimination  involves 
a  more  striking  discrimination  among  workmen — those 
employed  by  our  most  conspicuous  and  infiuential  kind  of 

loArk.,  1901,  C.  6951;  Fla.  Con.  St.,  1906,  §  3150;  Iowa  Code, 
§  2071;  Kansas  Gen.  St.,  1901,  §  5058;  Minn.  Rev.  Laws,  §  2042; 
Miss.  Const.,  §  193,  Code,  §  4056;  Mont,  1905,  C.  151;  Neb.,  1907, 
C.  48,  §  1;  New  Mex.,  1907,  C.  44;  N.  C.  Eev.  St.,  §  2643;  N.  Dak. 
Code,  1905,  §  4400;  Oregon,  1903,  p.  20,  §  1;  S.  Car.  Const.,  Art.  9, 
§  15;  S.  Dak.,  1907,  C.  219,  §  1;  Tex.,  1897,  C.  6;  see  also  U.  S., 
1909,  C.  149,  §  1 ;  Dist.  Col.,  1905,  C.  219,  §  1  (applies  to  all  common 
carriers). 

iiQklahoma  Const.,  Art.  9,  §  36;  Missouri  R.  S.,  §  2873,  Laws 
1907,  p.  251. 

121901,  p.  161. 

isVindicator  Min.  Co.  v.  Firstbrook,  36  Col.,  498. 

"Rio  Grande  Sampling  Co.  v.  Catlin,  40  Col.,  450. 


6 

corporations  are  given  a  benefit  withheld  from  the  gen- 
erality. 

A  review  of  employers'  liability  legislation  shows, 
taking  the  country  and  the  employments  by  and  large, 
no  disposition  to  absolve  the  servant  from  the  conse- 
quences of  his  own  neglect  except  in  a  rare  recognition 
of  the  comparative  negligence  doctrine.  And  there  is 
little  disposition  to  hold  the  master  liable  for  the  general 
risks  of  industry.  We  do  find,  however,  a  wide  dissatis- 
faction with  the  fellow  servant  rule,  but  only  in  respect 
of  certain  employments — chiefly  the  operation  of  railways. 

LEGISLATIVE  POWER  OVER  COMMON  LAW  DEFENCES. 

Having  outlined  the  actual  state  of  employers'  liabil- 
ity legislation  it  is  material  to  estimate  in  a  general  way 
the  constitutional  power  of  the  legislature  over  the  sub- 
ject. 
Fellow  In  Missouri,  etc.,  R.  v.  Mackey,^'  the  Supreme  Court 

B^^fni^kev.  of  the  United  States  upheld  a  Kansas  statute  abol- 
ishing the  fellow^  servant  rule  in  the  case  of  railway 
employees,  when  the  victim  is  not  in  fault,  saying: 
"Whatever  care  and  precaution  may  be  taken  by  a 
"company  in  conducting  its  business  and  selecting  its 
"servants,  if  injury  happens  to  its  passengers  from 
"the  negligence  or  incompetency  of  the  servants,  re- 
"sponsibility  at  once  attaches  to  it.  The  utmost  care  on 
"its  part  will  not  relieve  it  from  liability,  if  the  passenger 
"injured  be  himself  free  from  contributory  negligence. 
"The  law  of  1874  extends  the  doctrine  and  fixes  a  liability 
"upon  railroad  companies  when  injuries  are  subsequently 
"suffered  by  employees,  though  it  may  be  by  the  negligence 
"or  incompetency  of  a  fellow  servant  in  the  same  general 
"employment  and  acting  under  the  same  immediate  direc- 

1^27  U.  S.,  208. 


"tion.    That  its  passage  was  within  the  competency  of  the 
"legislature  we  have  no  doubt." 

No  statutory  qualification  of  the  fellow  servant  rule 
has  yet  been  adjudged  unconstitutional  in  respect  of  its 
general  principle.  There  is  some  difference  of  opinion, 
however,  whether  an  employer  can  be  held  for  the  neglect 
of  a  vice-principal  whose  employment  and  duties  are  pre- 
scribed by  statute.  The  Supreme  Court  of  the  United 
States  and  the  Supreme  Court  of  Illinois  affirm  liability ,^^ 
but  the  Pennsylvania  Supreme  Court  invalidated  an  act 
making  a  mine  owner  liable  for  accidents  due  to  neglect 
of  a  foreman  whose  function  and  duties  were  defined  by 
statute,  saying :  "This  is  a  strong  case  of  binding  the  con- 
sequences of  the  fault  or  folly  of  one  man  upon  another 
*  *  *  it  is  civil  responsibility  without  blame  and  for 
the  fault  of  another.''^^ 

In  any  event  the  rule  should  not  be  relaxed  in  the 
case  of  a  servant  who  is  practically  forced  upon  the  em- 
ployer by  influences  unrecognized  bv  law — by  trade  union  Trade 

<=>•-•/  unions. 

pressure,  for  example.  I  do  not  mean  that  a  "closed  shop" 
should  suggest  immunity  or  an  "open"  one  liability,  but 
simply  that  labor  conditions  be  given  circumstantial 
weight.  Thus,  in  Farmer  v.  Kearney  it  appeared  that  a  Farmer  v. 
w^orkman  whose  negligence  caused  an  accident  was  by 
trade  union  custom  practically  forced  upon  the  employer. 
The  court  held  that  a  statute  making  the  employer 
liable  for  a  vice-principaFs  negligence  did  not  apply,  say- 
ing: "When  the  workmen  delegate  to  a  labor  organiza- 
tion which  they  have  joined  (and  to  others  in  privity  with 
their  own  organization)  the  right  of  selection  and  super- 
intendence, they  agree  to  accept  the  membership  of  their 
fellow  workmen  in  those  organizations,  and  the  action  of 

i«Wilmin^on  Min.  Co.  v,  Fulton,  205  U.  S.,  60;  Henrietta  Coal 
Co.  V.  Martin,  221  111.,  460. 

i^Durkin  v.  Coal  Co.,  171  Pa.,  193;  see  also  Williams  v.  Coal 
Co.,  44  W.  Va.,  599. 


8 

those  organizations,  ipso  facto,  as  a  good  and  sufficient 
guaranty  to  them  for  their  individual  safety  and  protec- 
tion, so  far  as  the  contractor  is  concerned." ^^ 

But  while  a  strict  and  sweeping  application  of  the  fel- 
low servant  rule  has,  in  certain  forms  of  modern  indus- 
try, brought  injustices  not  foreseen  when  it  was  first  de- 
clared, the  principle  is  not  essentially  unjust.  If,  for  ex- 
ample, a  laundress  employs  two  helpers  and  one  be  in- 
jured through  the  other's  fault,  the  common  law,  in  refus- 
ing to  hold  her  liable,  averts  a  crushing  and  unmerited 
burden. 

Mr.  Augustine  BirrelFs  gibe  at  the  rule  "Abinger 
planted  it,  Alderson  watered  it  and  the  Devil  gave  it  in- 
crease," epitomizes  a  now  widely  held  opinion,  but  even  in 
England  the  rule  still  stands  in  common  law  actions,  ex- 
cept when  the  servant  is  a  vice-principal.  And  Chief  Judge 
Parker  of  New  York  has  referred  to  a  Pennsylvania  de- 
cision already  cited^^  as  intimating  that,  in  this  country, 
the  rule  could  not  be  entirely  swept  away,  though,  person- 
ally, he  was  of  a  different  opinion.^o 

Qualification  of  the  fellow  servant  rule,  when  con- 
tributory negligence  is  absent  is,  relatively,  a  conservative 
step  in  point  of  law,  for,  after  all,  the  master,  in  theory 
of  law,  selects  the  servants  even  when  he  employs  so  many 
as  to  forbid  actual  selection  on  his  part,  and  to  hold  him 
responsible  for  their  delinquencies  is  but  making  him 
liable  for  all  negligence  in  the  conduct  of  industry  not 
attributable  to  the  victims  themselves.  And  it  is  also 
relatively  unimportant  in  point  of  fact,  for  the  percentage 
of  accidents  attributable  to  fellow  servants  is  not  large — 
indeed,  the  New  York  Employers'  Liability  Commission 
concludes  that  ^'accidents  by  fault  of  a  fellow  servant  are 
comparatively  few."^^ 


18115  La.,  722. 

i^National  Protective  Ass'n  v.  Cumming,  170  N.  Y.,  324. 

20Durkin  V.  Coal  Co.,  171  Pa.,  193. 

^iReport,  p.  67.    See  also  infra,  p.  15. 


9 

Unquestionably  the  legislature  may  ordain  that  Negligence, 
"all  questions  of  negligence  and  contributory  negligence 
shall  be  left  to  the  jury,"  and  so  also  the  question  of  as- 
sumption of  risk.  For  there  is  here  no  attempt  to  take 
away  any  of  the  common  law  defences.  There  is  simply 
a  declaration  that  the  jury  may  estimate  their  weight  in 
view  of  all  the  circumstances. 

As  yet  there  has  been  no  attempt  expressly  to  abolish 
the  defence  of  contributory  negligence,  but  the  Supreme  Hoa;<e  ▼.  b. 
Court  of  Connecticut,  in  an  interesting  and  acute  opinion, 
discovered  an  attempt  in  the  Federal  Employers'  Liability 
Act  of  1908.  "The  doctrine  of  comparative  negligence," 
said  the  court,  "as  it  has  been  generally  understood  where 
"it  obtains,  is  that  slight  negligence  shall  not  defeat  an 
"action  against  one  guilty  of  gross  negligence.  In  the 
"form  assumed  by  the  Act  of  1908,  it  sanctions  a  recovery 
"where  the  plaintiff  has  been  guilty  of  gross  negligence 
"and  the  defendant  of  none  at  all.  To  hold  the  carrier 
"liable  in  such  case  because  of  the  imputed  negligence  of 
"any  offtcer,  agent,  or  employee,  whether  the  latter  be  at 
"the  time  engaged  in  inter-state  commerce  or  not,  seems 
"to  us  not  an  appropriate  or  legitimate  regulation  of  com- 
"merce  between  the  States,  but  rather  an  arbitrary  and 
"unlawful  deprivation  of  property,  within  the  meaning 
"of  the  Fifth  Amendment  to  the  Constitution  of  the 
"United  States. 

"It  serves  to  confirm  this  conclusion  that  the  liability 
"thrown  upon  the  carrier  by  Sec.  1  is  not  confined  to 
"damages  resulting  solely  from  the  negligence  of  its  offi- 
"cers,  agents,  or  employees.  It  is  fixed  and  complete  if 
"such  negligence  contributes  in  any  degree  to  the  injury, 
"although  it  be  partly  due  to  the  act  or  omission  of  a  mere 
"stranger.  There  can  be  no  contribution  between  wrong- 
"doers.  If,  therefore,  the  carrier  in  such  a  case  could  be 
"held  under  the  statute,  his  property  would  be  taken  to 
"pay  for  a  wrong  mainly,  perhaps,  done  by  one  with  whom 
"it  stood  in  no  contractual  relation  and  who,  except  for 


of  defences. 


10 

"this  particular  act,  had  no  connection  with  commerce 
"between  the  States."22 
Abolition  If  a  legislature  could  wholly  abolish  the  three  de- 

fences of  fellow  servant,  contributory  negligence  and  as- 
sumption of  risk,  it  would  declare,  in  effect,  that  what- 
ever accident  may  arise  in  course  of  the  employment  shall 
be  charged  to  the  master.  In  the  event  of  suit  the  master 
would  be  defenceless  against  an  adverse  verdict,  if  not 
indeed  unable  to  present  evidence  in  mitigation  of 
damages.  Legislation  thus  imposing  upon  the  master  an 
absolute  liability  regardless  of  fault  would  substantially 
involve  the  underlying  principle  of  the  foreign  compensa- 
tion laws,  and  we  shall  refer  to  it  in  our  discussion  of 
this  principle.  But,  considering  such  legislation  in  its 
direct  bearing,  I  am  of  the  opinion  that  it  would  be  un- 
constitutional. ( ;  ' 

For  the  prohibition  laid  upon  every  American  legis- 
lature that  no  one  shall  be  deprived  of  property  "without 
due  process  of  law"  means  at  least  that  in  case  a  claim 
be  made  on  his  property  a  man  shall  have  his  "day  in 
court."  A  "day  in  court"  means  not  only  an  impartial 
tribunal  to  hear  his  plea,  but  opportunity  to  support  it 
by  evidence,  and  the  common  law  upon  which  this  con- 
stitutional prohibition  is  historically  based  has  ever  al- 
lowed a  litigant  to  deny  or  explain  allegations.  A  right 
to  sue  at  common  law  implies  a  right  to  defend  which 
cannot  be  emasculated. 

FEDERAL   LEGISLATION. 

Congress  has  lately  injected  a  disturbing  element  into 
our  problem  by  asserting,  in  virtue  of  its  commerce 
power,  a  right  to  pass  employers'  liability  laws. 

In  1906  Congress  passed  an  employers'  liability  act 
affecting  common  carriers,  but  the  Supreme  Court  pro- 
nounced it  invalid  in  respect  of  carriers  doing  both  in- 

22Hoxie  V.  N.  Y.,  N.  H.  &  H.  K.,  82  Conn.,  352. 


11 

terstate  and  local  business  within  a  State  because  it 
did  not  clearly  limit  its  application  to  the  former. 
The  Court  said,  however,  "we  fail  to  perceive  any 
just  reason  for  holding  that  Congress  is  without 
power  to  regulate  the  relation  of  master  and  ser- 
vant, to  the  extent  that  regulations  adopted  on  that 
subject  are  strictly  confined  to  interstate  commerce,  and, 
therefore,  within  the  authority  given  to  use  all  means 
appropriate  to  the  exercise  of  the  powers  conferred."^^ 

On  April  22,  1908,  Congress  passed  a  new  act  in  which  Act  of  i908. 
it  attemptea  to  make  the  segregation  of  local  from  inter- 
state commerce  required  by  the  decision  of  the  Supreme 
Court  by  substituting  for  "shall  be  liable  in  damages  to 
any  of  its  employees/^  "shall  be  liable  in  damages  to'  any 
person  suffering  injury  while  he  is  employed  by  such 
carrier  in  such  commerce."^^  The  new  act  has  been  af- 
firmed in  inferior  federal  courts^^  and  will  soon  be  sub- 
mitted to  the  Supreme  Court. 

Meanwhile  a  workman  in  Connecticut  attempted  to  en- 
force a  claim  under  the  act  in  the  state  courts,  and  the 
Supreme  Court  of  the  State  held  that  Congress  did  not  Hoxie  v.  r. 
intend  that  the  tribunals  of  the  several  States  should 
enforce  the  federal  law  in  question ;  but  the  Court  speak- 
ing by  the  eminent  jurist,  Chief  Justice  Baldwin,  volun- 
teers its  opinion  upon  the  act  itself :  "By  Sec.  1,"  says  the 
court,  "the  rule  of  respondeat  superior  is  extended  so  as 
"to  make  the  common  carrier  by  railroad  between  States 
"responsible  for  an  injury  received  by  one  of  its  servants 
"in  the  course  of  his  employment  in  inter-state  commerce, 

23Employers'  Liability  Cases,  207  U.  S.,  463,  495.  The  act  has 
been  enforced  in  federal  territory,  El  Paso  R.  v.  Gutierrez,  215 
U.  S.,  87. 

-"^Italics  mine.  See  Act  Apr.  5,  1910,  giving  the  United  States 
and  the  state  courts  concurrent  jurisdiction,  and  the  Senate  debate, 
Mar.  30- Apr.  1,  on  this  provision,  and  also  on  the  provision  impos- 
ing a  federal  rule  of  distribution  of  damages  in  case  of  death. 

25Watson  V.  St.  Louis,  etc.,  R,  169  Fed.  R.;  Zikos  v.  O.  R.  & 
N.  Co.,  179  Fed.  R.,  893. 


12 

"due  in  whole  or  part  to  the  negligence  of  any  of  its  offl- 
"cers,  agents,  or  employees,  whether  they  are  or  are  not, 
"at  the  time,  themselves  employed  in  such  commerce.  An 
"inter-state  carrier  is  generally  also  an  intra-state  car- 
"rier.  It  may  have  a  considerable  force  of  officers,  agents, 
"or  employees,  engaged  in  business  that  is  wholly  local. 
"Does  the  power  to  regulate  commerce  between  the  States 
"go  so  far  as  to  warrant  imposing  on  a  carrier  responsi- 
"bility  to  a  servant  engaged  in  that  business  for  the  con- 
"sequences  of  the  negligence  of  another  of  its  servants, 
"occurring  when  the  latter  was  not  engaged  in  it,  or  in- 
"deed  in  any  business  for  the  common  employer?  If  a 
"freight  clerk,  whose  duties  are  confined  to  keeping  tally 
"of  goods  consigned  from  one  point  to  another  in  the  same 
"State,  in  an  office  devoted  to  that  purpose,  should  care- 
"lessly  discharge  a  rifle,  a  bullet  from  which  should  hit  a 
"brakeman  on  an  inter-state  train,  a  mile  away,  we  are 
"of  opinion  that  it  could  not  fairly  be  deemed  a  regulation 
"of  inter-state  commerce  to  hold  the  common  employer 
"responsible  for  the  injury.  The  Employers'  Liability 
"Cases,  207  U.  S.,  463,  498.  Nor  would  it  be  such  a  regu- 
"lation  to  make  an  inter-state  railroad  company  liable  to 
"a  train  hand  who,  while  going  to  work,  was  accidentally 
"struck  by  an  automobile  directed  by  one  of  its  vice-presi- 
"dents  or  land  agents  while  on  a  pleasure  drive.  ♦  ♦  ♦ 
"Except  so  far  as  the  Act  is  a  regulation  of  commerce  be- 
"tween  the  States,  its  enactment  was  beyond  the  power 
"of  Congress.  That  it  remotely  affects  such  commerce  is 
"not  sufficient,  if  that  result  is  only  to  be  secured  by  in- 
"vading  the  settled  limits  of  the  sovereignty  of  the  States 
"with  respect  to  their  own  internal  police.  Williams  v 
"Fear,  179  CT.  S.,  270,  278;  Keller  v.  United  States,  213 
"U.  S.,  29  Supreme  Court  Keporter,  470.  The  Act  can- 
"not  be  interpreted  as  referring  only  to  negligence  of 
"employees  while  engaged  in  inter-state  commerce.  It 
"substantially  re-enacts  in  this  particular  the  words  of 
"the  previous  Employers'  Liability  Act  of  1906  (32  U.  S. 


I 


13 

"Stat,  at  Large,  232),  and  must  be  presumed  to  have  been 
"drafted  with  knowledge  of  the  judicial  construction 
"which  those  words  had  received.  The  Employers'  Liabil- 
"ity  Cases,  207  U.  S.,  463,  500."26 

The  state  court  demonstrates,  in  my  opinion,  that  Con- 
gress has  failed  to  meet  the  objections  made  by  the  Su- 
preme Court  to  the  earlier  statute.  The  strength  of  its 
reasoning  and  the  cogency  of  its  illustrations  should  be 
most  persuasive  to  the  federal  tribunal.  I  shall  not, 
however,  argue  here  a  case  soon  to  be  fully  argued  before 
the  Supreme  Court,  but  I  do  not  hesitate  to  say  that 
if  the  statute  be  valid  it  should  be  promptly  repealed.  It 
opposes  the  wholesome  tendency  towards  systematic  com- 
pensation and  it  might  seriously  interfere  with  systematic 
compensation  in  the  States  by  subjecting  our  most  import" 
ant  group  of  employees — the  railway  men — to  a  less 
favorable  regime. 

CONCLUSIONS  ON  EMPLOYERS'  LIABILITY  ACTS. 

Statutory  enlargement  of  employers'  liability,  or,  to 
put  it  in  another  way,  of  workman's  ability  to  maintain 
damage  suits,  may,  as  distinguished  from  the  European 
compensation  systems,  be  called  the  Yankee  notion  for 
promoting  workmen's  litigation. 

The  plan  is  wasteful :  Each  year  an  enormous  sum  is 
expended  for  liability  insurance,  legal  costs  and  damages. 
When  to  these  expenditures  we  add  the  amounts  paid 
voluntarily  and  by  way  of  compromise  we  have  a  yearly 
outlay  by  employers  which  under  a  systematic  method  of 
distribution  would  go  far  toward  assuring  reasonable 
indemnity  to  a  great  number  of  victims  now  uncompen- 
sated. 

The  plan  is  inefficient:    A  few  injured  workmen  re- 

26Hoxie  V.  N.  Y.,  N.  H.  &  H.  R,  82  Conn.,  352.    Compare  Brad- 
bury V.  C.  K.  L  &  P.  E.,  Iowa  Supreme  Court,  Oct.  26,  1910. 


14 

ceive,  after  long  delay,  awards  whose  relation  to  their  just 
claims  is  largely  a  matter  of  chance. 

The  plan  serves  no  public  interest:  When  an  award 
is  finally  paid  it  is  handed  over  in  a  lump  sum  to  be  hus- 
banded or  wasted  as  the  case  may  be. 

Despite  the  shortcomings  of  the  plan,  which  be  it 
remembered  are  largely  the  uncertainties  and  delays  in- 
cident to  all  litigation,  legislatures  are  still  promoting  it 
in  one  way  or  another  and  we  shall  consider  later  impor- 
tant questions  in  regard  to  its  bearing  upon  the  matter 
of  systematic  compensation. 


15 

PART    TWO. 
SYSTEMATIC  COMPENSATION. 

Systematic  compensation  for  industrial  accident  will 
first  be  considered  in  its  common  compulsory  form.  After- 
ward we  shall  inquire  whether  or  how  far  a  voluntary 
form  will  meet  our  conditions. 

I. 

COMPULSORY  COMPENSATION. 

In  passing  from  a  regime  of  employers'  liability  for 
such  injuries  and  for  such  amounts  as  shall  be  determined 
in  an  action  at  law  to  a  regime  of  workmen's  compensa- 
tion for  such  accidents  and  for  such  amounts  as  shall  be 
prescribed  by  statute,  we  encounter  a  new  set  of  juridi- 
cal economic  and  political  ideas. 

Instead  of  occasionally  placing  upon  an  employer  the 
loosely  estimated  cost  of  a  particular  accident  we  have  an 
attempt  to  impose  upon  employers  generally  a  portion  of 
the  cost  of  all  accidents.  Instead  of  a  few  injured  work- 
men receiving  damages,  which  may  be  more  or  less  than 
their  due,  we  have  rights  to  definite  compensation  for  all 
accidents — rights  which  segregate  the  workmen  affected 
into  a  preferred  class,  which,  in  effect,  confer  upon  them  a 
distinct  status  in  the  community. ^^ 

Instead  of  fault  in  accident  being  the  vital  point  we 
have  the  fact  of  accident.  In  this  relation  we  note  the 
German  allocation  of  the  causes  of  industrial  accident 
in  1897.  Fault  of  employer,  17.30  per  cent.;  of  work-  ^ 
men,  29.74 ;  of  both,  4.83 ;  of  fellow  servant  or  other  per- 
son, 5.31;  unavoidable  danger,  41.55;  act  of  God,  1.27.^^ 

27See  p.  118. 

^^See  Report  Wisconsin  Bureau  of  Labor,  1908,  p.  101. 


16 

Accepting  these  figures  as  broadly  accurate,  we  perceive 
how  far  the  legal  responsibility  of  employers  under  the 
new  regime  outruns  the  idea  of  personal  responsibility 
which  defined  their  duties  under  the  old.  Indeed,  respon- 
sibility under  the  new  regime  takes  no  account  of  the 
personal  factor.  Its  basis  is  wholly  conventional.  All 
accidents  are  attributed  to  risk  of  the  trade  and  dealt 
with  accordingly. 

FOEEIGN  COMPENSATION  LAWS. 

Compulsory  compensation  for  industrial  accident  is 
now  the  general  rule  in  most  civilized  states,  and  we  shall 
first  give  some  account  of  its  laws  and  methods,  its  origin, 
its  theory  and  status,  its  effects,  and  then  consider  it  from 
the  American  standpoint. 

Foreign  legislation  offers  a  wide  range  for  the  study  of 
compensation  schemes,  and  our  Department  of  Commerce 
and  Labor  has  performed  a  valuable  service  in  publishing 
the  principal  texts  of  the  foreign  laws.^^ 

The  documentation  of  the  foreign  schemes  is  not  fully 
presented  in  these  compensation  laws.  Statutes  dealing 
with  state  insurance  offices,  sickness  and  infirmity  insur- 
ance, old  age  pensions,  etc.,  etc.,  must  be  read  in  connec- 
tion with  some  of  them.  And  ancillary  to  each  law  are 
decisions,  rules,  orders,  etc.,  effectuating  its  application 
to  say  nothing  of  insurance  company  regulations  and  by- 
laws of  mutual  associations. 

Fully  to  analyze  this  mass  of  foreign  law  is  beyond 
the  scope  of  our  brief,  whose  purpose  is,  in  this  relation, 

2»24  Ann.  Eep.  Commissioner  of  Labor,  1910.  Austria,  Belgium, 
British  Columbia,  Cape  of  Good  Hope,  Denmark,  Finland,  France, 
Germany,  Great  Britain,  Greece,  Hungary,  Italy,  Luxemburg, 
Netherlands,  New  South  Wales,  New  Zealand,  Norway,  Quebec, 
Queensland,  Russia,  South  Australia,  Spain  and  Sweden.  The 
Russell  Sage  Foundation  has  just  issued  a  useful  study — Work- 
men's Insurance  in  Europe,  by  Lee  K.  Frankel  and  Mils  M.  Daw- 
son, which  we  shall  cite  by  the  authors'  names. 


17 

to  indicate  in  a  very  broad  way  the  methods  of  dealing 
with  the  more  important  points  of  general  interest. 

EMPLOYMENTS   COVERED. 

Great  Britain  excepted,  the  several  countries  do  not  Hazardous 

^         '  trades. 

include  all  employments  in  their  compensation  laws. 
The  major  classification  is  the  selection  of  hazardous,  as 
distinguished  from  non-hazardous  employments. 

In  some  laws  the  selection  is  made  in  brief  and  more 
or  less  general  terms. 

Thus  the  French  law  covers  workmen  "in  the  build- 
ing trades,  in  mills,  factories  and  workyards,  in  the  busi- 
ness of  transportation  by  land  and  water,  in  that  of 
loading  and  unloading,  in  public  storehouses,  mines,  sur- 
face mines,  quarries,  and,  furthermore,  in  every  enter- 
prise or  branch  thereof  in  which  explosive  materials  are 
manufactured  or  used,  or  in  which  a  machine  operated 
by  a  power  other  than  that  of  man  or  animal  is  em- 
ployed"  (l).3o 

Other  laws  give  elaborate  lists  of  the  industries 
covered. 

The  laws  agree  in  covering  mining,  manufacturing, 
transportation,  building,  etc.,  but  there  is  some  diversity 
in  respect  of  agriculture.  For  example,  agricultural  em-  Agriculture. 
ployment  is  expressly  excepted  in  the  Quebec  law  (1).  It 
is  expressly  included  in  respect  of  accidents  due  to  the  use 
of  mechanical  power  in  Austria  (1),  Hungary  (3),  and 
Italy  (1.4:),  and  impliedly  in  respect  of  power  accidents 
where  these  are  embraced  in  general  terms  as  in  Fr since 
(1)  and  New  Zealand  (1st  schedule).  In  Germany  agri- 
cultural laborers  are  insured  under  a  separate  statute. ^^ 

Some  states  provide  separate  statutes  or  separate  treat-  special  Laws. 

30By  the  law  of  Apr.  12,  1906,  "All  commercial  enterprises"  are 
brought  within  the  compensation  scheme. 
siSee  Frankel  and  Dawson,  96,  98. 


18 


Domestic  and 

commercial 

service. 


ment  for  certain  employments,  e.  g.,  mining,  navigation, 
railroading,  building.  For  example,  Germany  has  special 
laws  for  navigation  and  building,  and  the  railroads,  being 
operated  by  the  government,  are  under  an  official  regime. 
The  British  Act  contains  special  provisions  for  seamen. 

Few,  if  any,  systems  save  the  British  cover  the  domes- 
tic, mercantile  and  commercial  employments,  except  so 
far  as  the  occasional  power  accidents  in  these  employ- 
ments fall  within  a  general  provision  of  the  law. 


Petty 
industry. 


Petty  industry — an  establishment  employing  only 
several  hands — is,  or  may  be,  excepted  from  the  compul- 
sory force  of  certain  compensation  laws,  for  example, 
Italy  (7),  Germany  (2.3). 

The  exception  seems  to  be  partly  based  on  the  theory 
that  the  smaller  the  working  body  the  better  the  super- 
vision and  the  lesser  hazard,  but  in  view  of  its  results  we 
may  fairly  treat  it  as  expressing  the  idea  that  the  small 
employer  may  be  too  nearly  in  the  financial  condition  of 
his  workmen  to  warrant  the  imposition  of  the  burden. 


Administra- 
tive inclusion. 


Generally  speaking  the  legislature  defines  once  for  all 
the  employments  affected.  But  we  find  here  and  there  a 
provision  authorizing  inclusion  or  exemption  by  adminis- 
trative order. 

For  instance,  in  Germany  the  Federal  Council  may 
exempt  "establishments  which  do  not  involve  special  dan- 
ger of  accident"  (1.3)  ;  and  in  Austria  the  Minister 
of  the  Interior  may  exempt  or  include  certain  establish- 
ments owing  to  the  absence  or  presence  of  dangerous 
features  (3). 


The  British 
Act, 


In  sharp  contrast  with  the  other  systems  is  the  com- 
prehensive law  of  Great  Britain.  The  Act  of  1897  cov- 
ered certain  hazardous  employments  only  and  excepted 
the  "workshop" — an  establishment  not  employing  more 
than  five  hands.     Agriculture  was  included  by  the  amend- 


19 

ment  of  1900.  The  Act  of  190G  covers  "any  employ- 
ment" (1)  without  regard  to  its  hazard  or  to  the  size 
of  a  particular  establishment;  excepting,  however,  em- 
ployment of  a  "casual  nature"  (13) . 

INJURIES  COMPENSATED. 

The  nature  of  the  injuries  calling  for  compensation, 
their  occasion,  cause,  and  period  of  disablement  consti- 
tute an  intricate  chapter  of  the  compensation  laws, 
whose  main  points  only  will  be  indicated. 

The  injury  must  be  accidental  and  the  broadly  reme-  "Accident, 
dial  purpose  of  the  laws  is  generally  emphasized  by  a 
broad  definition  of  "accident." 

The  German  Imperial  Insurance  Ofi&ce  defines  an  ac- 
cident as  "a  happening  which,  doing  injury  to  the  integ- 
rity of  the  human  body,  is  produced  by  a  single  stroke  and 
is  clearly  marked  by  a  beginning  and  an  end."  A  French 
publicist  defines  it  as  "an  injury  to  the  human  body  due 
to  the  sudden  and  violent  action  of  an  exterior  cause."^^ 
The  House  of  Lords  definies  it  as  "an  unlooked  for  mis- 
hap or  an  untoward  event  which  is  not  expected  or  de- 
signed."^^ 

Among  the  "accidents"  embraced  in  the  English  law 
are  the  projection  of  an  anthrax  germ  in  the  eye,^^  a 
strain  rupturing  an  aneurism,^^  even  though  too  slight  to 
affect  a  healthy  man,^^  a  heat  stroke  in  a  furnace  room,^^ 
a  sunstroke,^  ^  the  murder  of  a  messenger  carrying  his 
employer's  money. 

Among  those  embraced  in  the  French  law  are  an  in- 
jury from  falling  in  a  fit,  from  the  horseplay  of  a  comrade 

^^Sachet,  Legislation  sur  les  Accidents  du  Travail,  I,  256. 

ssClover  v.  Hughes,  1910,  A.  C,  244. 

s^Brinton's  v.  Turvey,  1905,  A.  C,  320. 

ssFenton  v.  Thorley,  1903,  A.  C,  230. 

36Clover  V.  Hughes,  1910,  A.  C,  242. 

37Ismay  v.  Williamson,  1908,  A.  C,  437. 

88See  Law  Times,  June  27,  1908. 


20 


Occupational 
disease. 


unless  the  victim  began  it,^^  from  voluntarily  taking  a 
risk  in  the  line  of  humanity  or  duty.^^ 

We  note  here  that  the  British  Workman's  Compensa- 
tion Act  requires  the  employer  to  compensate  the  victims 
of  certain  "occupational  diseases,"  anthrax,  lead,  mer- 
cury, phosphorous  and  arsenical  poisoning,  for  example, 
to  which  the  Home  Secretary  has  added  others. 

"Occupational  disease"  is  not,  on  the  Continent,  em- 
braced in  accident  compensation  laws. 


Accident  In 
service. 


Victim's 
ntiisconduct. 


The  laws  broadly  agree  that  workmen  shall  receive 
compensation  for  such  accidents  only  as  occur  in  the  mas- 
ter's service — for  example,  "in  the  course  of  their  em- 
ployment," in  Austria  (1)  and  Germany  (1) ;  "by  reason 
of  or  in  course  of  their  work,"  in  France  (1)  and  Quebec 
(1) ;  "in  the  course  of  and  as  a  result  of  fulfilling  the 
labor  contract  governed  by  the  Act  of  March  10,  1900," 
in  Belgium  (1);  "arising  out  of  and  in  course  of  the 
employment,"  Great  Britain  (1).^^ 

The  practical  construction  of  these  provisions  varies 
somewhat  in  the  several  countries,  but  as  a  whole  they 
express  the  principle  that  a  workman  shall  receive  com- 
pensation only  for  injuries  occurring  during  the  actual  or 
constructive  performance  of  his  labor  contract  and  con- 
nected in  some  way  with  the  work.  Furthermore,  the 
accident  must  cause  disability — disfigurement  is  not  ma- 
terial unless  it  actually  interferes  with  employment.*  ^ 

In  Great  Britain,  "serious  and  wilful  misconduct"  of 
the  victim  absolves  the  master  unless  the  injury  result 
in  "death  or  serious  and  permanent  disablement"  (1.  2. 
c ) .  The  continental  systems  generally  provide  that  com- 
pensation shall  not  be  paid  for  an  injury  intentionally 

39Sachet,  I,  416,  421,  422.  Compare  Fitzgerald  v.  Clarke,  1908, 
2  K  B.,  797. 

^'^See  Walton,  Work.  Comp.  Law  of  Quebec,  p.  90. 

"^^It  seems  that  the  "or"  in  the  French  Act  gives  a  somewhat 
wider  range  than  the  "and"  in  the  British  Act,  Walton,  p.  83. 

*2See  Walton,  p.  125. 


21 

caused  by  the  victim,  though  in  Hungary  the  dependents 
are  entitled  in  a  case  of  fatality  (75).  Inexcusable  fault 
is  more  strictly  dealt  with  in  Germany  and  Austria  than 
in  France,  where  in  such  case  a  judge  may  award  a  por- 
tion of  the  regular  compensation.^^ 

All  the  laws  deny  compensation  for  casualties  en-  Disability 
tailing  less  than  a  fixed  period  of  disablement,  but  each 
falls  into  one  of  two  grand  divisions  according  as  acci- 
dents are  or  are  not  partially  covered  by  a  system  of 
sickness  insurance. 

In  the  first  division  the  periods  are  comparatively 
long.  In  Austria  four  weeks  and  in  Germany  three 
months  (ninety-one  days),  disability  elapse  before  ac- 
cident compensation  becomes  due,  but  in  each  country  a 
disability  of  more  than  three  days  is  compensated  through 
a  compulsory  sickness  insurance  system  to  which  the 
workmen  contribute  two-thirds  of  the  expense  and  the  em- 
ployer one-third. 

In  the  second  division  they  are  comparatively  brief — 
for  example,  two  days  in  the  Netherlands,  three  in  Rus- 
sia, five  in  France,  one  week  in  Belgium,  Great  Britain, 
New  Zealand,  South  Australia,  two  weeks  in  British 
Columbia,  Queensland. 

WHO  RECEIVE  COMPENSATION. 

The  industries  embraced  in  each  law  broadly  indi- 
cate the  parties  entitled  to  compensation,  except  where 
discriminations  are  made,  as  in  singling  out  workmen 
engaged  on  the  hazardous  side  of  an  employment — e.  g.j 
the  use  of  machinery  in  agriculture.^* 

In  each  country,  however,  a  right  to  compensation  wage  basis. 
depends  more  or  less  upon  a  maximum  rate  of  wages. 

Great  Britain  alone  distinguishes  here  between  the 
manual  and  the  clerical  employee,  imposing  no  wage 

^Sachet,   I,    415. 
44See  p.  17. 


22 


limit  upon  the  former  while  denying  compensation  to  the 
latter  whose  annual  wages  exceed  $1,216  (13). 

In  the  other  countries  the  wage  limit  affects  all  em- 
ployees and  works  in  one  of  two  ways.  In  one  group  of 
laws  a  victim  receiving  more  than  a  certain  annual  wage 
is  not  compensated:  Belgium,  $463;  Denmark,  $645; 
Germany,  $714;  Kussia,  $772;  Italy,  $1.35  per  diem. 

In  the  second  group  employees  in  receipt  of  more  than 
a  fixed  sum  receive  a  compensation  based  upon  these  fig- 
ures, and  not  taking  the  excess  into  account:  Austria, 
$487;  France,  $463;  Hungary,  $487;  Norway,  $321; 
Netherlands,  $1.61  per  diem. 

WHO  PAY  COMPENSATION. 


State 
payments. 


No  state  appears  to  contribute  to  accident  compensa- 
tion (except  of  course  where  an  industry  is  operated  by 
the  state,  e.  g.y  the  German  railways),  the  prevalent  pur- 
pose being,  as  we  shall  see,  to  impose  this  upon  the 
industries  affected  and  not  directly  upon  the  resources 
of  the  community  at  large. ^^ 

We  shall  see,  however,  that  certain  states  take  a  deep 
interest  in  the  integrity  and  distribution  of  compensation 
funds,  acting  as  administrators,  insurance  agents,  etc.; 
and  in  Germany  the  government  actually  advances  com- 
pensation through  the  post  offices,  these  honoring  or- 
ders given  by  the  employers'  associations  which  are  there- 
after assessed  for  the  sums  advanced  (97). 


Workmen's 
contributions. 


In  Austria  workmen  receiving  cash  wages  are  re- 
(juired  to  contribute  ten  per  cent,  thereof  to  the  accident 
fund  (17),  the  employer  making  deduction  and  deposit- 
ing the  amounts. 

Austria  alone  requires,  in  terms,  a  contribution  to 
accident  compensation,  and  this  a  small  percentage,  but 
it  prescribes  that  accidents  entailing  not  more  than  four 

45See  p.  55. 


23 

weeks  disability  shall  be  compensated  from  the  sickness 
insurance  fund,  to  which  workmen  contribute  two-thirds 
to  the  employer's  one. 

In  Germany  a  rule  of  like  tenor,  save  that  the  four 
weeks  is  increased  to  thirteen,  makes  the  workmen  the 
chief  contributors  in  the  majority  of  casualties — for  ex- 
ample, in  1907,  out  of  662,901  accidents  only  144,703  fell 
within  the  compensation  law^^ — but  their  contribution  to 
the  aggregate  cost  of  accident  is  relatively  slight,  the  esti- 
mates for  1886-95  allotting  92  per  cent,  to  the  em- 
ployers.* "^ 

All  the  laws  impose  upon  the  employer  the  immediate,  Empioyer-s 

^  ^  A       »/  ^    /  responsibility 

and,  excepting  the  workmen's  contribution  in  Austria, 
the  entire  liability  for  whatever  is  defined  as  accident 
compensation. 

Eeserving  for  the  present  the  question  whether  this 
statutory  liability  may  be  passed  on  or  distributed  by 
some  method  of  insurance,  we  inquire  first  whether  it 
excludes  liability  in  every  other  form,  and  then  whether 
the  employer  may  substitute  a  voluntary  compensation 
scheme  for  the  statutory  one. 


AS  TO  EXCLUSION  OF  LAW  SUITS. 


misconduct. 


The  fact  that  an  employer  is  liable  for  statutory  com-  Master's 
pensation  does  not,  of  course,  relieve  him  from  prosecu- 
tion in  case  the  cause  of  injury  falls  within  the  criminal 
law. 

Furthermore,  as  statutory  compensation,  being  graded 
to  cover  all  accidents  regardless  of  their  causes,  presum- 
ably falls  below  the  damages  probably  recoverable  by  the 
victim  of  an  employer's  negligence  and  well  below  the 
punitive  damages  recoverable  in  case  of  his  gross  mis- 

^^See  Frankel  and  Dawson,  p.  101.  On  page  124  we  read  that 
in  Austria  in  1906  out  of  109,111  accidents  over  77,000  fell  within 
the  four  weeks'  period. 

^^Shadwell,  Industrial  Efficiency,  2d  Ed.,  p.  409. 


24 


conduct,  it  is  material  to  inquire  whether  or  when  the 
victim  may  sue  instead  of  claiming  compensation. 

As  the  laws  generally  agree  in  denying  compensation 
to  the  victim  of  his  own  misconduct,^^  so  generally  they 
leave  open  a  suit  for  damages  to  the  victim  of  an  em- 
ployer's gross  misconduct,  though  in  Germany  suit  is 
maintainable  only  when  the  employer  or  his  agent  has 
been  subjected  to  a  penal  sentence  (133). 

Also  gross  misconduct  commonly  requires  the  em- 
ployer to  indemnify  third  parties  for  whatever  liability 
they  have  assumed  for  him  or  share  with  him.  For  ex- 
ample, if  he  be  a  member  of  an  association  he  must  make 
good  to  it  compensation  paid  on  this  account — Hungary 
(81),  Germany   (136). 


Suits  barred. 


Suits 
permitted. 


Beyond  agreeing  that  damage  suits  may  be  main- 
tained in  cases  of  gross  or  criminal  misconduct  the  laws 
divide  into  two  groups  in  their  regard. 

In  one  group,  including  Belgium  (21),  France  (2), 
Hungary  (82),  Germany  (135),  the  injured  workman 
is  barred  from  action. 

Great  Britain  heads  the  other  group.  The  Work- 
men's Compensation  Act  leaves  intact  not  only  the  com- 
mon law  action,  but  actions  under  the  Employers'  Lia- 
bility Act  of  1880,  but  it  seems  that  a  workman  who  loses 
his  suit  cannot  thereafter  institute  arbitration  proceed- 
ings under  the  Act.^^  He  has  made  his  election  and  must 
abide  by  it.  The  Act  provides,  however,  that  where  it  is 
determined  in  an  action  that  the  defendant  is  not  liable 
in  damages,  but  would  have  been  liable  for  the  statutory 
compensation  the  court  shall,  if  the  plaintiff  request, 
assess  compensation,  deducting,  however,  all  or  part  of  the 
costs  of  suit  (1  (4)). 

In  Sweden  a  workman  may  both  claim  indemnity 
under  the  "common  law  or  special  law"  and  compensa- 

*8See  p.  20. 

*9Edwards  v.  Godfrey,  1899,  2  K.  B.,  333. 


25 

tion  under  the  statute,  but  if  he  obtain  damages  the  em- 
ployer may  deduct  the  compensation  (9). 

SUBSTITUTION  OF  VOLUNTARY  SCHEME. 

On  the  theory  that  a  workman  in  "contracting  out"  "Contracting 
of  a  benefit  allowed  by  statute  is  not  really  a  free  agent,  °"*' ' 
the  laws  generally  forbid  unofficial  agreements  between 
employer  and  workmen  whereby  the  latter  waive  the  ben- 
efit of  their  provisions.^^ 

Some  laws  provide,  however,  that  a  voluntary  com- 
pensation scheme  approved  by  the  authorities  as  being 
of  at  least  equal  value  to  the  beneficiaries  may  be  sub- 
stituted in  whole  or  in  part  for  the  compulsory  one. 

Workmen's  acceptance  of  the  scheme  is  required  in 
Great  Britain  (3  (1) ;  but  not  in  Austria  (57),  France 
(6),  Italy  (19). 

THE  COMPENSATION. 

The    laws    generally  require    the    employer  to  pay  Funeral 
funeral  expenses  not  exceeding  a  fixed  amount,  and  first  ^''^®^^^' 
aid  to  the  injured  is  usually  prescribed  in  one  way  or 
another. 

All  the  laws  base  compensation  on  the  victim's  earn-  Basis  of 

.  1    .  i  •  -1  earnings. 

ings,  and  m  computing  these  any  valuable  consideration 
over  and  above  cash  payments  is  generally  reckoned,  as 
for  example,  a  workman's  board.  In  an  English  case  a 
waiter's  tips  were  taken  into  account.^ ^ 

In  some  countries  earnings  are  calculated  on  a  col- 
lective basis  for  certain  classes  of  workmen,  for  example, 
seamen  and  agricultural  laborers  in  Germany.^ ^ 

In  cases  of  fatality  compensation  is  paid  to  dependents  Fatality. 
either  in  the  form  of  a  pension  or  in  a  lump  sum. 

^°See,  for  example,  Germany  (141). 
"Penn  v.  Spiers,  1908,  1  K.  B.,  766. 
^^Frankel  and  Dawson,  pp.  98,  99. 


26 

A  pension  of  fifty  per  cent,  of  annual  earnings  is  paid 
in  Norway,  sixty  per  cent,  in  Austria,  Prance,  Ger- 
many, Hungary,  The  Netherlands;  sixty-six  per  cent,  in 
Eussia.  Belgium  prescribes  an  annuity  of  thirty  per 
cent,  of  annual  earnings. 

In  the  following  states  these  lump  sums  are  paid  in- 
stead of  pensions:  Three  years'  earnings,  but  not  under 
|729  nor  over  |1,459,  in  Great  Britain  and  South  Aus- 
tralia,— not  under  |1,000  or  over  $1,500  in  British  Colum- 
bia, not  under  |973  or  over  |1,946  in  New  Zealand  and 
Queensland.  Four  years'  earnings,  but  not  under  $321 
nor  over  $857,  in  Denmark.  Five  times  the  annual  earn- 
ings in  Italy. 

Some  laws  apportion  the  death  compensation  among 
dependents  according  to  a  rigid  schedule  so  that  the  sum 
actually  paid  depends  on  the  existence  of  persons  an- 
swering the  description.  For  example,  in  Sweden  $32  to 
a  widow  during  widowhood  and  $16  to  each  child  until 
it  reaches  fifteen  years,  the  whole  not  to  exceed  $80  a 
year.  Other  laws  require  the  distribution  of  a  specific 
amount  among  whatever  dependents  may  be  entitled,  for 
example,  Italy  (10). 

Total  For  total  disability  the  following  states  prescribe 

these  amounts  by  way  of  pension:  Austria,  Denmark, 
Germany,  Hungary,  and  Norway,  sixty-six  and  two- 
thirds  per  cent,  of  the  annual  earnings;  Belgium,  fifty 
per  cent,  daily  wages;  Great  Britain  a  weekly  payment 
of  not  more  than  fifty  per  cent,  of  average  weekly  earn- 
ings and  not  over  $4.87  per  week;  a  weekly  payment  of 
not  more  than  fifty  per  cent,  of  average  weekly  earnings, 
not  exceeding  $1,500  altogether,  in  British  Columbia,  not 
exceeding  $1,459  in  New  Zealand,  South  Australia  and 
Western  Austrailia,  not  exceeding  $1,936  in  Queensland; 
in  Italy  six  times  annual  earnings  but  not  less  than  $579 ; 
in  Sweden  an  annual  pension  of  not  more  than  $80.  In 
Germany  and  Hungary  the  pension  is  increased  to  full 


27 

annual  earnings  when  the  victim  is  so  helpless  as  to 
require  an  attendant. 

In  case  of  partial  disability  certain  states  expressly  ^^j^^f^. 
prescribe  compensation  according  to  an  estimated  diminu- 
tion of  the  victim's  earning  power — that  is  to  say,  he  re- 
ceives the  assumed  difference  between  earnings  before 
and  after  the  accident,^ ^  and  it  would  seem  that  the 
laws  generally  operate  along  this  line. 

Most  laws  do  not  grade  disability  compensation  ac-  specific  sums. 
cording  to  a  classified  list  of  specific  injuries.  But 
Sweden  (5)  specifies  certain  evidences  of  total  disability 
and  schedules  compensation  for  partial  disability  from 
seventy  per  cent,  of  the  compensation  limit  in  the  case  of 
loss  of  one  eye  and  impairment  of  the  other  down  to  ten 
per  cent,  for  deafness  of  one  ear.  And  the  second 
schedule  of  the  New  Zealand  law  prescribes  compensa- 
tion ranging  from  one  hundred  per  cent,  of  the  limit  in 
such  cases  as  mental  incapacity,  loss  of  eyes,  both  hands 
or  feet,  etc.,  down  to  four  per  cent,  for  loss  of  finger 
joint.^^ 

Whether  disability,  total  or  partial,  is  permanent  or  Permanent 

.  .  .  .  .  .    .  ,  .    ,  ,  disability — 

temporary  gives  rise  to  various  provisions  which  need  Revision, 
not  be  analyzed,  but  it  is  important  to  note  that  in  a  case 
of  continuing  disability  the  laws  generally  provide  for 
revision  of  the  compensation  down  or  up  as  the  condition 
of  the  beneficiary  changes  for  better  or  worse. 

An  employer  or  his  insurer  who  shall  become  respon-  commutation 

■^      *^  -^  of  pension. 

sible  for  an  accident  pension  may  desire  to  commute  it 
for  a  lump  sum  which  the  beneficiary  may  be  even  more 
desirous  of  handling.  Whether  this  may  be  done  de- 
pends generally  upon  how  keenly  the  state  is  concerned 

^^See,  for  instance,  Germany  (9.2). 

^*The  editor  of  the  Law  Quarterly  Review  finds  in  "a  scale  of 
fixed  compensation  for  different  injuries"  a  "curious  reversion  to 
the  methods  of  the  archaic  European  law."     Apr.,  1910. 


28 


to  assure  a  continuing  aid  to  the  beneficiaries,  for  the 
handing  over  of  a  lump  sum  may  well  mean  a  speedy  dis- 
sipation of  the  money  and  an  early  recourse  to  that 
charitable  aid  which  systematic  compensation  aims  to 
avoid. 

The  policy  of  the  European  states  generally  is  against 
commutation.  For  example,  in  Austria  commutation  is 
allowed  only  when  "the  commune  legally  bound  to  care 
for  the  claimant  under  the  poor  laws  has  consented  to  the 
agreement"  (41).  In  France  (28)  the  capital  sum  can- 
not, usually,  be  demanded,  but  the  employer  may  dis- 
charge his  obligation  by  paying  the  sum  into  the  National 
Ketirement  Fund  (which  then  assumes  the  pension)  and 
he  must  do  this  in  case  he  ceases  to  do  business.  In  Ger- 
many (95)  a  partial  disability  pension  of  not  more  than 
fifteen  per  cent,  of  the  full  amount  may  be  commuted  for 
a  capital  sum  if  a  request  by  the  beneficiary  shall  be  ap- 
proved by  the  authorities. 


CLAIMS  FOR  COMPENSATION  AND  SETTLEMENT  OF  DISPUTES. 


Record  and 
claim. 


The  laws  generally  prescribe  that  the  circumstance 
and  nature  of  each  casualty  be  speedily  recorded,  and 
that  a  claim  for  compensation  shall  be  presented  within 
a  fixed  time. 


Medical 
examinatioiL 


Establishment  of  the  fact  and  degree  of  accidental 
injury  and  an  accurate  estimate  of  its  effect  are  the  es- 
sential foundations  of  every  just  claim,  and  the  laws  en- 
deavor to  guard  against  mistake,  simulation  and  malin- 
gering by  prescribing  an  impartial  medical  service. 

It  would  seem  that  everywhere  a  claimant  may  be 
required  to  submit  to  an  impartial  medical  examination ; 
and,  furthermore,  that,  as  in  Great  Britain,  when  a 
simple  surgical  operation  will  relieve  or  lessen  disability 


29 

the  claimant  must  submit  to  it  or  reduce  his  claim*^*^ 
though  he  is  not  called  upon  to  undergo  a  serious  one.^^ 
In  stating  that  the  laws  generally  prescribe  the  opin- 
ion of  an  impartial  expert  in  case  the  doctors  of  the 
respective  parties  disagree  we  simply  indicate  the  gen- 
eral method  of  dealing  with  a  branch  of  the  compensa- 
tion system  of  vital  importance,  and  one  peculiarly  open 
to  errors  and  deceptions  whose  rectification  depends 
largely  upon  the  professional  skill  and  standing  of  the 
doctors  employed. 

Passing  from  the  special  subject  of  medical  disputes  Disputed 
to  the  general  procedure  for  the  presentation  of  claims 
and  the  adjudication  of  the  serious  controversies  that 
will  arise,  we  find  widely  different  methods  among  the 
several  systems. 

In  Germany,  where  the  compensation  system  is  wholly  Germany, 
within  the  sphere  of  public  law,^''  the  judicial  tribunals 
are,  it  would  seem,  practically  excluded  from  all  partici- 
pation in  its  working  and  even  from  interpreting  it.  The 
employers'  associations  determine  claims  in  the  first  in- 
stance, and  their  decisions  may  be  appealed  to  specially 
constituted  arbitral  tribunals.  Interpretation  is  the 
function  of  the  Imperial  Insurance  Office. 

The  general  spirit  of  the  German  method  is  followed 
in  Austria  and  Hungary,  though  with  important  differ- 
ences in  form. 


In  Great  Britain  the  question  whether  a  particular  Great 

1    ,         .,        ^  ..  .  .       ,  .  Britain. 

case  IS  covered  by  the  Compensation  Act  is  determined 
by  the  regular  courts  in  a  regular  suit,  and  there  is  much 
litigation  over  the  interpretation  of  important  phrases. 

When,  however,  the  case  is  admittedly    within    the 
Act  the  compensation  is  in  the  vast  majority  of  instances 

'^''See  Anderson  v,  Baird,  5  F.,  972. 
"Rothwell  V.  Davies,  19  T.  L.  E.,  423. 
"See  p.  61. 


30 

agreed  upon  according  to  a  simple  formula;  and,  in  case 
of  dispute,  the  county  courts  are  authorized  to  arbitrate 
or  appoint  arbitrators. 

Some  such  system  generally  obtains  in  the  British 
Colonies.  In  Quebec,  however,  a  claimant  must  institute 
an  action  at  law  without  a  jury  and  the  judgment  of  the 
court  may  be  appealed.  In  New  Zealand  a  court  of  arbi- 
tration, whose  general  powers  are  defined  by  the  In- 
dustrial Conciliation  and  Arbitration  Act  of  1908,  has 
jurisdiction  over  all  claims  for  compensation. 

France.  FraucB  largely  utilizes  the  civil  courts  in  the  adjust- 

ment of  compensation  claims,  though  the  procedure  is  of 
a  somewhat  summary  nature.  The  accident  itself  is  the 
subject  of  a  judicial  inquiry  conducted  by  a  justice  of  the 
peace  (12,  13),  and,  if  a  claim  for  compensation  is  not 
agreed  upon  before  the  president  of  a  district  court,  suit 
follows  in  a  court  chosen  by  the  more  diligent  party. 
The  court  shall  summarily  decide  the  matter,  and  the 
decision  may  be  appealed  according  to  the  common  law 
(16,  17). 

INSURANCE. 

Compulsory  compensation  is  the  root  of  every  system, 
and  generally,  as  we  have  seen,  the  compulsion  is  ad- 
dressed to  employers.  This  element  of  compulsion  needs 
to  be  emphasized  as  being  fundamental  because  some 
writers  seem  to  emphasize  compulsion  only  where  insur- 
ance of  compensation  is  made  obligatory.  But  in  truth, 
insurance,  even  though  a  statute  link  it  with  compensa- 
tion, is  essentially  a  sequent  and  not  a  intrinsic  factor 
thereof.  It  is  a  method  for  at  once  effectuating  and  dis- 
tributing a  primary  obligation  already  imposed.  In  treat- 
ing insurance,  whether  compulsory  or  not,  as  ancillary  to 
compulsory  compensation,  we  do  not  minimize  its  real 
importance — we  simply  put  it  in  its  proper  place. 

Insurance    of    compensation    benefits    the    injured 


31 

workman  by  presumably  securing  to  Mm  the  payment  of 
whatever  sums  may  become  due,  and  where  it  is  made 
obligatory  we  may  assume  that  the  workman's  interest  is 
the  prominent  motive. 

But  to  the  party  responsible  for  compensation  insur- 
ance, whether  obligatory  or  not,  is  of  equal  or  even  greater 
concern.  Indeed  it  is  usually  a  commercial  necessity,  for 
only  by  some  method  of  insurance  may  the  burden  of  his 
risk  be  lightened  through  distribution. 

This  need  is  completel}^  met  in  the  states  where  the 
law  at  once  requires  insurance  and  ordains  the  method. 
It  is  partly  met  where  the  law  encourages  insurance  by 
indicating  institutions  to  which  the  employer  may  trans- 
fer his  obligations.  Where  the  law  is  silent  he  who  would 
insure  must  do  it  in  his  own  way  and  at  his  own  risk. 

Always  bearing  in  mind  that  insurance  in  its  passive 
sense  tends  to  secure  the  workman,  we  have  also  to  con- 
sider it  in  its  active  sense — as  something  to  be  done  by 
the  responsible  party  for  his  immediate  protection.  With 
this  prefatory  word  on  the  double  function  of  insurance, 
we  take  up  an  important  and  difficult  chapter  of  our 
subject. 

"State"  insurance  means,  I  take  it,  insurance  at  the  state 

u^'  I,  ^1         X  •  1,     J  J   INSURANCE. 

public  expense — a  charge  on  the  tax-paymg  body,  and 
there  are  those  who  would  thus  socialize  all  insurance 
under  government  auspices. 

At  present  state  insurance  is  exemplified  fully  in 
such  legislation  as  the  British  old  age  pension  scheme, 
and,  to  a  degree  where,  as  in  Germany,  the  taxpayers  con- 
tribute to  invalidity  and  pension  annuities,  but  as  yet  it 
has  hardly  if  at  all  entered  the  field  of  industrial  accident. 

While  state  insurance  in  its  primary  sense  plays  at 
present  a  relatively  small  part  in  workmen's  compensa- 
tion, we  shall  presently  mark  its  appearance  in  a  second- 


32 


ary  sense  wherever  the  government  acts  as  the  depositary 
and  administrator  of  accident  funds  created  by  private 
contributions. 


EMPLOYERS' 
INSURANCE. 


Great 
BHtain. 


An  employer  who,  under  a  compensation  law,  is  liable 
at  any  moment  for  an  unforeseen  sum  of  money,  should 
be  able  to  anticipate  and  assuage  the  contingency  by 
some  method  of  insurance.  Indeed,  if  the  theory  of  com- 
pensation laws  that  industry  should  bear  the  cost  of  its 
casualties  is  to  be  fairly  effectuated  it  must  be  possible 
approximately  to  calculate  the  cost,  and  this  cannot  be 
done  if  each  casualty  must  be  financed  separately.  We 
have,  therefore,  to  inquire  whether  a  given  law  imposes 
upon  employers  a  collective  liability,  which  involves  dis- 
tribution of  risk,  or  an  individual  liability;  and  how  in 
either  case  it  deals  with  the  matter  of  insurance— and 
whether  or  how  far  it  permits  an  employer  to  shift  his 
liability.  In  pursuing  this  inquiry  the  laws  may  be  con- 
veniently classified  according  as  they  ignore  insurance,  as 
they  encourage  it  or  as  they  compel  it. 

The  British  Compensation  Act  imposes  individual 
liability  upon  every  employer  within  its  purview,  from 
the  railway  company  to  the  small  householder. 

Except  as  the  Act  authorizes  the  Secretary  of  State 
to  order  an  employer  to  insure  his  workmen  against  in- 
dustrial disease  in  an  established  mutual  trade  insurance 
company  or  society  which  already  comprises  a  majority 
of  the  employers  in  the  particular  industry  (8.7) — an  ex- 
ception, be  it  noted,  not  affecting  "accident"  in  the  ordi- 
nary sense — the  British  system  takes  no  account  of  insur- 
ance. The  employer  is  left  to  insure  his  risk  or  not  at 
discretion.  He  cannot  get  rid  of  his  personal  liability, 
except  that  in  case  of  a  continuing  compensation  he  may 
purchase  an  annuity  from  the  Post  Office  Savings  Bank 
— an  opportunity  which  seems  to  be  rarely  utilized.^^ 

'^^See    Sir   Edward   Brabrook;    VIII    Congres   des    Assurances 
Sociales,  Kome,  1908,  p.  382. 


33 

The  state  takes  no  concern  in  securing  the  workman 
beyond  making  a  compensation  claim  a  first  lien  in  case 
of  the  employer's  insolvency. 

The  British  Colonies  generally  follow  the  mother  coun- 
try in  leaving  insurance  to  the  employers'  discretion, 
though  the  recent  law  of  Quebec  so  far  recognizes  the 
functions  of  insurance  companies  as  to  require  those  who 
assume  payment  of  the  "rents'' — pensions — to  deposit  an 
adequate  fund  with  the  government  of  the  Dominion  or 
the  Province  and  to  conform  to  such  conditions  as  the 
lieutenant  governor  may  impose  (11).  In  the  event  of 
a  company's  default,  however,  the  employer  is  not  re- 
lieved. 

In  fine,  the  British  Empire  prescribes  "workmen's 
compensation"  as  distinguished  from  "workmen's  in- 
surance," yet  it  involves  insurance  in  a  broad  sense,  for, 
as  Lord  Morris  said,  "The  liability  of  the  employer 
*  *  *  becomes  that  of  an  insurer  against  accident  to 
the  workmen. "^^ 


CONTINENTAL  INSURANCE  SYSTEMS. 

The  workmen's  compensation  systems  of  continental 
Europe  differ  radically  from  the  British  in  evincing  more 
or  less  concern  in  insurance,  and  in  this  relation  they  are 
broadly  classified  according  as  the  insurance  is  voluntary' 
or  compulsory. 

Insurance  is  wholly  or  mainly  voluntary  in  Belgium,  voluntary 
Denmark,  Sweden,  France,  and  in  each  country  the  em- 
ployers are  individually  responsible  for  compensation. 

In  Belgium  the  employer  may  shift  his  responsibility 
to  an  insurance  company  or  a  mutual  association  ap- 
proved by  the  state  (10, 11) .  In  case  he  becomes  liable  for 

eoPowell  V.  Main  Colliery  Co.,  1900,  A.  C,  374.     See  also  Pol- 
lock's Torts,  8th  Ed.,  p.  107. 


34 

a  pension  he  shall  secure  its  capitalized  value  by  some 
approved  system  of  deposit  or  insurance  (14-16). 

In  Denmark  individual  responsibility  of  an  employer 
may  be  transferred  to  an  approved  insurance  company 
(8,9). 

In  Sweden  the  employer  may  shift  his  liability  by  in- 
suring in  a  State  Insurance  Institute,  from  which  he  may 
also  purchase  whatever  pensions  may  be  charged  upon 
him  (10). 

France.  In  France  the  employer  is  individually  responsible. 

He  may  be  released  from  the  whole  or  a  part  of  the  cost 
of  illness  and  the  temporary  compensation  by  satisfying 
the  authorities  that  he  has  insured  his  workmen  in  an 
approved  mutual  association  (5,  6). 

For  securing  compensation  for  death  or  permanent  in- 
capacity the  French  law  provides  "Art.  24.  Whenever  em- 
ployers who  are  liable,  or  the  insurance  companies,  with 
fixed  premiums  or  mutual,  or  the  guaranty  associations 
whose  members  are  liable  jointly  or  severally,  fail  to  pay, 
when  due,  the  compensation  charged  against  them  as  a 
result  of  accidents  causing  death  or  permanent  incapacity 
for  work,  the  payment  shall  be  secured  to  the  interested 
parties  through  the  National  Old  Age  Pension  Fund,  by 
means  of  a  special  guaranty  fund,  established  as  herein- 
after provided,  the  management  of  which  shall  be  entrust- 
ed to  the  said  Fund. 

Art.  25.  To  establish  the  special  guaranty  fund  there 
shall  be  added  to  the  charge  for  licenses  of  the  indus^ 
tries  specified  in  Article  1,  four  centimes  (0.8  cent) 
extra.  A  tax  of  five  centimes  (1  cent)  a  hectare  per 
mining  concession  shall  be  collected  on  mines.  These 
taxes  may  be  increased  or  reduced  according  to  the  neces- 
sities of  the  case  by  the  financial  law.^^ 

The  National  Retirement  Fund  may  have  recourse 

^^They  have  been  increased  twenty  per  cent,  for  1910  and  1911 
by  the  law  of  May  29,  1909. 


35 

against  the  debtor  employers  for  the  amounts  paid  by  it 
on  their  account  under  the  preceding  provisions. 

For  reimbursing  itself  for  its  advances  the  Fund,  in 
case  of  insurance  of  the  employer,  shall  enjoy  the  prefer- 
ence under  the  provisions  of  Article  2102  of  the  Civil 
Code  relative  to  the  compensation  due  by  the  insurer, 
and  it  shall  have  no  recourse  against  the  employer"  (26). 


Compulsory  insurance  is  the  rule  in  the  remaining  compul- 
S3^stems  we  shall  survey.  Workmen  "are  insured"  in  surancb. 
Germany,  "must  be  insured"  in  Italy ;  "shall  be  insured" 
in  Austria,  The  Netherlands  and  Norway;  are  "subject  to 
compulsory  insurance"  in  Hungary.  In  such  states 
alone  do  we  find  workmen's  "insurance"  thoroughly 
exemplified. 

In  The  Netherlands,  Italv  and  Norway  the  employers  individual 

'  "  "  JT      »/  insurance. 

are  individually  responsible. 

The  Netherlands  has  established  a  Royal  Insurance 
Bank,  with  the  Post  Office  as  branches  thereof.  Each 
employer  may  pay  to  the  Bank  annually  a  premium  based 
upon  his  wage  account,  the  Bank  paying  from  the  ag- 
gregate fund  whatever  compensation  may  be  due.  An 
employer  may,  however,  be  permitted  to  assume  person- 
ally his  obligation  or  to  transfer  it  to  a  company  or  a 
mutual  association  provided  he  or  the  transferee  shall 
deposit  in  the  Bank  a  sufficient  pledge.  It  appears  that 
the  Bank  gets  the  poorer  risks  and  is  obliged  to  make  up 
deficiencies.^^ 

Norway  requires  all  employers  to  insure  in  a  State 
Insurance  Institution  (2). 

In  Italy  the  employer  must  insure  either  in  the  Na- 
tional Fund  for  Insurance  of  Workmen  against  Indus- 
trial Accidents  or  in  private  companies  approved  by  the 
State  (8),  unless  he  shall  establish  for  at  least  five  hun- 
dred workmen  an  adequate  compensation  scheme,  or  be 

^^VIII  Congres  des  Assurances  Sociales,  1908,  p.  471. 


36 

joined  in  a  mutual  insurance  association,  both  being  ap- 
proved by  the  State  (19). 


Collective  In  Germany,  Austria  and  Hungary  compulsory  com- 

pensation and  compulsory  insurance  are  actually  inter- 
woven, for  each  system  imposes  upon  employers  a  col- 
lective responsibility,  and  this  involves  the  basic  principle 
of  insurance — distribution  of  risk.  The  employers^  acci- 
dent association  is  the  backbone  of  each  system.^  2 


THE  GERMAN  ASSOCIATIONS. 

As  Germany  led  off  in  adopting  the  principle  of  work- 
men's compensation,  so  in  the  employers'  accident  asso- 
ciations she  has  made  the  most  striking  contribution  to 
its  machinery.^^ 

Premising  that  these  associations  are  subject  to  regu- 
lative and  corrective  powers  immediately  or  finally  vested 
in  the  Imperial  Insurance  Office,  we  shall  give  a  general 
idea  of  their  organization,  functions  and  responsibilities 
utilizing  largely  the  literal  texts,  though  not  keeping  to 
the  statutory  order. 

^^Employers'  associations  formed  especially  for  insuring  compen- 
sation risks  are  substantially  developed  in  Great  Britain  and  France, 
where  insurance  is  voluntary. 

In  Great  Britain,  for  example,  many  mine  owners  are  thus 
associated.  The  great  Iron  Trades  Association  showed  for  18  months 
ending  Dec.  31,  1908,  premimn  income,  £252,166;  other  income, 
£7,241 ;  compensation  paid  with  legal  and  medical  expenses,  £210,996 ; 
cost  of  management,  8  per  cent,  of  premium  income  (Post  Magazine 
and  Monitor,  Dec.  25,  1909). 

In  France  two  kinds  of  associations — the  Mutual  Insurance 
Society  and  the  Guaranty  Syndicate — are  recognized  by  the  com- 
pensation law,  and  are  largely  utilized  in  important  industries. 

^^In  1906  there  were  66  industrial  trade  associations  including 
over  659  000  establishments  and  insuring  over  8,625,000  persons; 
and  46  agricultural  and  forestry  associations,  embracing  over  4,695,- 
000  establishments  and  over  11,189,000  persons.  Among  the  in- 
dustrial associations  we  note,  for  instance,  14  in  the  building  trades, 
8  in  textiles  and  steel,  4  in  wood  working  and  transportation,  2  in 
metal  working  and  mining  and  single  associations  in  chemical,  gas 
and  water  works. 


37 

Insurance  is  undertaken  on  the  mutual  plan  by  the  composition 

and  scope. 

heads  of  establishments  subject  to  the  law,  who  are  for 
this  purpose  united  into  accident  associations.  These  are 
formed  for  specified  districts  and  comprise  all  the  estab- 
lishments of  those  branches  of  industry  for  which  they 
are  formed,  though  the  latter  provision  may  be  waived 
in  the  case  of  railways  (28-1) . 

An  association  may  provide  for  its  division  into  geo- 
graphical sections  (38-1). 

Establishments  comprising  substantial  parts  of  differ- 
ent branches  of  industry  shall  belong  to  that  association 
to  which  the  main  establishment  belongs  (28-2). 

The  association  shall  compensate  for  accidents  in 
other  establishments  if  these  occur  in  operations  for  which 
the  order  is  given  and  the  wages  paid  by  a  member  (28-4) . 


No  contributions  may  be  required  or  expenditures  Purposes  of 

J  .     -  ,        «  , .  ,      .     .  expenditure. 

made  except  for  payment  of  compensation,  administra- 
tion, reserve  funds,  prizes  for  rescue  and  prevention  of 
accidents  and,  with  the  consent  of  the  Imperial  Insurance 
Office,  the  establishment  of  hospitals,  sanatoriums,  etc. 
(31-1). 


The  association  may  acquire  rights,  assume  obligations  status. 
and  sue  and  be  sued  in  its  own  name,  and  for  its  obliga- 
tions the  property  of  the  association  is  the  only  security 
for  creditors  (28-5,  6). 

The  internal  law  of  the  association  is  contained  in  a  constitution, 
constitution  enacted  by  the  members  at  a  general  meeting 
and  approved  by  the  Imperial  Insurance  Office   (36-1, 
39-1). 

The  affairs  of  the  association,  except  as  they  are  within  Directors 
the  competency  of  the  general  meeting,  are  administered  ^°  *^^°  ^' 
by  a  board  of  directors  and  by  agents  who  shall  be  mem- 
bers and  shall  serve  without  compensation  save  for  ex- 
penses (41-44). 


38 

It  is  represented  by  its  board  of  directors  and  is  bound 
by  all  lawful  acts  of  the  board  (41-1,  2) . 

Members.  Evcry  owucr  of  an  establishment  belonging  to  those 

branches  of  industry  for  which  the  association  is  estab- 
lished is  a  member  of  the  association  if  the  establishment 
is  located  in  the  district  of  the  association.  The  owner- 
ship begins  when  the  establishment  opens  or  when  it  be- 
comes subject  to  insurance  (55-1). 

The  owner  shall  present  to  the  lower  administrative 
authorities  a  declaration  stating  inter  alia  the  nature  of 
his  establishment,  the  number  of  insured  persons  therein 
and  the  accident  association  to  which  it  belongs;  and  in 
case  of  mistake  in  the  latter  respect  the  authorities  shall 
assign  it  to  the  proper  association  (56,  57) . 

Every  member  has  a  vote  (55-2)  and  is  eligible  to 
election  as  a  director  and  an  agent  of  the  association, 
which  honorary  (unsalaried)  offices  cannot  be  declined 
under  penalty  of  fine,  except  for  reasons  justifying 
declination  of  guardianship  (43). 


Law  of  June 
80. 1800. 


The  law  of  June  30,  1900,  amending  the  Accident  In- 
surance Laws,  thus  provides  for  the  institution  of  new 
associations  and  the  rearrangement  of  existing  ones 
(2-1-4). 

The  establishment  of  accident  associations  for  the 
branches  of  industry  newly  subjected  to  accident  insur- 
ance according  to  article  1  of  the  industrial  accident  in- 
surance law  or  their  assignment  to  existing  accident  as- 
sociations is  accomplished  by  the  federal  council  after 
consultation  with  the  representatives  of  the  branches  of 
industry  and  the  associations  concerned. 

Until  the  constitution  of  the  accident  associations 
established  under  this  law  shall  have  been  approved, 
branches  of  industry  may  be  withdrawn  by  decree  of  the 
Federal  Council,  after  consultation  with  the  boards  of 


39 

directors  of  the  associations  concerned,  from  one  of  the 
accident  associations  established  under  the  laws  of  July  6, 
1884;  of  May  28,  1885;  of  July  11,  1887,  and  of  July  13, 
1887,  and  assigned  to  another  association,  without  refer- 
ence to  the  provisions  of  these  laws. 

In  the  newly  established  accident  association  the  con- 
stitution shall  be  adopted  by  a  constituent  general  meet- 
ing. This  consists  of  delegates  from  chambers  of  com- 
merce, chambers  of  industry  or  similar  representative 
economic  organizations  to  which  the  employers  of  the 
branches  of  industries  concerned  belong.  The  central 
state  authorities  designate  those  bodies  which  are  author- 
ized to  send  delegates  and  determine  the  number  of  dele- 
gates for  each  according  to  its  economic  importance.  If 
the  territory  of  the  accident  association  covers  the  terri- 
tory of  more  than  one  state,  the  bodies  authorized  to  send 
delegates  and  the  number  of  delegates  which  each  may 
send  are  determined  by  the  Imperial  Chancellor  after 
agreement  with  the  state  governments  concerned. 

The  imperial  insurance  office  shall  call  the  constituent 
general  meeting  and  shall  conduct  the  proceedings  until  a 
provisional  board  of  directors  shall  have  been  elected. 

The  general  meeting  consists  of  all  the  members,  un-  General 
less  the  constitution  places  it  on  a  representative  basis,  ™^^*  °*' 
as  where  the  association  is  divided  into  sections  (38) . 

The  general  meeting  elects  directors,  amends  the  con- 
stitution, audits  and  accepts  the  annual  balance  sheet 
unless  it  confides  this  to  a  committee  (41-3),  determines 
the  rules  respecting  the  legal  relations  and  the  appoint- 
ment of  officials  (48-1),  establishes  rules  for  classifying 
establishments  according  to  the  degree  of  accident  risk  in 
them  and  for  determining  the  amount  of  contributions 
in  the  different  establishments  (i.  e.,  the  risk  tariff, 
49-1). 


40 

The  board  of  directors  determines  the  compensation 
(69). 
<3ompen-  The  fund  for  compensation  and  expenses  is  raised  an- 

nually by  contributions  assessed  on  the  basis,  first,  of  the 
wages  earned  in  their  respective  establishments  by  the 
persons  insured,  or,  in  certain  cases,  of  the  local  daily 
wage  of  the  adult  day  laborer,  and,  second,  of  the  risk 
tariff  provided  for  in  tlie  constitution  (29). 

Whenever  an  accident  is  caused  by  an  employer  in- 
tentionally or  "through  negligence,  with  omission  of  that 
degree  of  caution  which  is  especially  required"  of  him  in 
virtue  of  his  position  the  association  shall  in  the  first 
case,  and  may  in  the  second,  hold  him  liable  for  its  out- 
lay (136-1). 

Contributions  may  be  collected  in  advance  for  the  first 
year.  Unless  the  constitution  provides  otherwise,  these 
shall  be  made  in  proportion  to  the  number  of  persons  who 
are  employed  by  the  members  in  their  respective  estab- 
lishments (31-2). 

When  the  association  is  divided  into  geographical 
sections  the  constitution  may  require  not  more  than  75 
per  cent,  of  the  compensation  to  be  borne  by  the  section 
wherein  the  accident  occurs  (50). 

Associations  may  unite  for  the  joint  payment  of  com- 
pensation for  which  they  are  jointly  responsible  (51-1). 

Risk  tariff.  The  risk  tariff,  which  is  framed  by  the  general  meet- 

ing subject  to  the  approval  of  the  Imperial  Insurance 
Office,  is  the  basis  for  classifying  the  several  establish- 
ments according  to  the  degree  of  accident  risk  and  for 
determining  the  amount  of  their  contributions.^^  After 
the  first  two  years  the  tariff  shall  be  revised  every  five 
years  in  the  light  of  the  accidents  that  have  occurred  in 
the  different  establishments. 

^"^For  example,  in  the  chemical  association  the  assessment  basis 
ranges  from  20  in  Class  A  which  includes  apothecaries  to  150  in 
Class  P  in  which  are  makers  of  high  explosives. — Frankel  and 
Dawson,  p.  113. 


41 

The  revision  is  submitted  to  the  general  meeting  with 
a  statement  of  the  compensated  accidents  in  each  estab- 
lishment and  may  be  adopted  if  the  Imperial  Insurance 
Office  shall  approve.  The  general  meeting  may  then  for 
the  ensuing  period  impose  supplementary  contributions 
or  grant  returns  of  contribution  to  employers  according 
to  the  accidents  that  have  occurred  in  their  establishments 
(49-1-6). 


Compensation  is  advanced  to  the  beneficiaries  by  the  Payment 

^  "^  through  Post 

postal  administration  upon  orders  of  the  accident  as-  office, 
sociations.  Once  a  year  the  central  postal  authorities 
send  to  the  associations  statements  of  payments  made 
and  designate  the  postal  banks  to  which  the  amounts  due 
shall  be  paid  (98).  These  amounts  are  then  collected 
from  the  members  by  the  board  of  directors  (99). 


The  accident  association  shall  accumulate  a  reserve  Reserve  fund, 
fund.  For  its  accumulation  there  shall  be  levied,  when 
the  first  period  for  the  payment  of  insurance  contributions 
arrives,  a  supplementary  assessment  of  300  per  cent,  of 
such  contributions;  at  the  second  period,  200  per  cent.; 
at  the  third,  150  per  cent. ;  at  the  fourth,  100  per  cent. ; 
at  the  fifth,  80  per  cent. ;  at  the  sixth,  60  per  cent.,  and 
thereafter  ten  per  cent,  less  at  each  period  until  the 
eleventh  period.  After  the  close  of  the  first  eleven  years, 
or  provided  that  the  eleventh  year  has  already  been  passed 
at  the  time  this  law  goes  into  effect,  from  the  latter  time, 
the  accident  association  shall  annually  add  to  the  amount 
of  the  legal  reserve,  for  three  years  10  per  cent.,  and  then 
for  each  succeeding  period  of  three  years  1  per  cent,  less 
down  to  4  per  cent.,  including  the  interest  each  time. 
After  the  expiration  of  this  time  such  amounts  shall  be 
taken  from  the  interest  of  the  reserve  fund  as  may  be  re- 
quired to  prevent  a  further  increase  in  the  average  amount 
of  the  contribution  required  per  insured  person.    The  rest 


42 


of  the  interest  is  again  to  be  added  to  the  reserve  fund 
(34-1). 

In  case  of  stringent  need,  the  association,  with  the 
approval  of  the  Imperial  Insurance  Office,  may  use  the 
interest  of  the  reserve  and  even  encroach  on  the  principal 
of  the  reserve  before  the  accumulation  required  above  has 
been  attained.  Kestitution  to  the  reserve  shall  then  take 
place  as  may  be  required  by  the  Imperial  Insurance  Of- 
fice (34-2). 
Safety  rules.  The  associatlous  issue  regulations  for  arrangements 

to  be  made  and  orders  to  be  issued  by  the  members  for  the 
prevention  of  accidents  in  their  establishments,  under 
threat  of  punishment  for  failure  to  comply  by  fines  of 
not  more  than  1000  marks  or  by  listing  the  establish- 
ment in  a  higher  risk  class,  or,  if  it  is  already  in  the  high- 
est class,  by  the  imposition  of  surtaxes  of  not  more  than 
twice  the  amount  of  the  contribution   (112-1). 

The  association  also  prescribes  rules  of  conduct  for 
the  insured  workmen  in  order  to  prevent  accidents  with 
a  penalty  of  not  more  than  six  marks  for  violation 
(112-2). 

The  regulations  shall  be  submitted  to  the  Imperial 
Office  and  shall  be  made  with  the  co-operation  of  repre- 
sentative workmen.  "The  number  of  these  representa- 
tives shall  be  equal  to  the  directors  participating  and 
they  shall  have  full  voting  power."  "There  shall  be  sent 
to  the  representative  of  the  workmen  a  draft  of  the  rules 
which  are  to  be  submitted  to  them  for  their  consideration 
and  adoption  (113). 

The  Imperial  Office  may  consult  workmen's  repre- 
sentatives before  approving  the  rules  (115). 
Inspection.  Associatious  shall  enforce  the  regulations  and  to  this 

end  may  authorize  inspectors  and  accountants  to  investi- 
gate the  establishments  (119). 

"If  the  employer  fears  that  the  inspection  of  his  busi- 
ness by  the  technical  inspectors  of  the  association  may 
result  in  the  disclosure  of  a  trade  secret  or  in  injury  to 


43 

his  business  interests  he  may  claim  the  privilege  of  hav- 
ing the  inspection  conducted  by  other  experts"  (120) . 

Technical  experts  and  accountants  shall  be  sworn  and 
shall  not  disclose  any  information,  "and  shall  refrain 
from  copying  any  arrangement  or  method  of  operation 
within  the  establishment  which  are  kept  secret  by  the 
owner,  but  which  come  to  their  knowledge,  provided  that 
these  are  trade  secrets"   (131).^^ 

The  compulsory  associations  of  Austria  and  Hungary  Associations  m 
differ  in  many  respects  from  the  German  model  but  we     *     '     ' 
shall  not  only  certain  radical  differences  in  organization. 

In  Hungary  employers  and  employees  are  grouped  in 
an  association  called  the  National  Workmen's  Sickness 
and  Accident  Insurance  Fund  to  which  are  affiliated  Dis- 
trict Insurance  Funds  of  local  operation.  The  associa- 
tion is  a  "self-governing  organization  of  the  employees 
insured  against  sickness  and  accident  and  of  their  em- 
ployers" (103)  under  the  supervision  of  a  State  Work- 
mens  Insurance  Office. 

Austria  follows  Germany  in  segregating  accident  from 
sickness  insurance  but  the  employments  are  not,  as  in 
Germany,  grouped  by  industries.^^  They  are  grouped  by 
districts  conterminous  with  the  territorial  provinces  of 
the  state  and  for  each  district  there  is  an  insurance  insti- 

®^The  German  insurance  authorities  have  presented  to  the  Reich- German  re- 
stag  a  comprehensive  workmen's  insurance  plan  whose  main  pur-  *^^™  v^^jec  . 
poses  are  to  co-ordinate  the  administration  of  sickness,  invalidity 
and  accident  insurances  and  to  simplify  and  expedite  proceedings. 
Among  the  proposed  changes  in  the  accident  law  we  note  these: 
Inclusion  of  practically  all  employees  except  clerks  and  commercial 
travelers:  Transfer  of  authority  to  fix  compensation  in  the  first 
instance  from  the  employers'  associations  to  local  insurance  boards 
whereon  employers  and  workmen  are  equally  represented:  A  time 
limit  on  petty  pensions;  obligation  of  pensioner  to  accept  suitable 
employment,  and  abatement  of  benefits  when  the  income  of  a  wage- 
earning  pensioner  is  larger  than  before  the  accident :  Strengthening 
of  the  reserve  of  employers'  associations.  (See  Frankel  and  Daw- 
son, p.  406,  etc.) 

^^Railways  are  exceptional,  the  Austrian  lines,  largely  operated 
by  the  state,  are  in  a  special  association. 


44 

tution  of  whose  directors  one-third  represent  the  em- 
ployers, one-third  the  workmen  and  one-third  are  ap- 
pointed by  the  state.^^ 

Several  states  prescribe  the  compulsory  association 
of  employers  in  certain  circumstances.  In  Italy,  for 
example,  the  state  may  order  the  employers  in  a  particu- 
lar industry  to  form  a  mutual  association  provided  there 
be  at  least  fifteen  thousand  workmen  employed  there- 
in (26). 

PERMISSIVE   INSURANCE. 

We  have  remarked  that  most  Continental  states  differ 
from  Great  Britain  in  exempting  a  large  number  of  em- 
ployers from  compulsory  compensation  either  because  the 
industry  is  non-hazardous  or  the  plant  small. 

But  some  of  them  offer  not  only  to  the  exempt  em- 
ployer but  to  workmen  at  large  an  opportunity  to  par- 
ticipate in  the  insurance  system,  an  inducement  to  the 
former  being  release  from  civil  liability  for  accident  and 
to  the  latter  an  increased  compensation  if  he  be  already 
covered  by  the  law,  and  if  not  an  assurance  of  indemnity. 
This  opportunity  is,  for  example,  given  by  the  laws  of 
Germany,  France  and  Hungary. 

INTERNATIONAL  QUESTIONS. 

A  compensation  system,  being  part  of  the  municipal 
law  of  the  state,  its  burdens  and  benefits  may  be  pre- 
sumed to  affect  all  persons  within  the  jurisdiction, 
whether  they  be  foreigners  or  citizens,  and  none  without 
the  jurisdiction. 

This  general  rule  is,  however,  frequently  supplemented 

®^It  is  said  that  Austria  prefers  the  territorial  to  the  industrial 
grouping  not  only  because  of  her  decentralizing  policy,  but  because 
the  latter  would  offend  the  Catholics  and  Slavs  by  increasing  the 
influence  of  the  greater  industries  which  are  largely  controlled  by 
the  Germans  and  the  Jews.  See  Sachet,  Legislation  sur  les  Acci- 
dents  du  Travail,  I,  34. 


45 

by  modifications  devised  in  view  of  the  ramifications  of 
industrial  enterprise  and  the  migration  of  workmen. 

Considering  first  the  ease  of  the  employers,  we  find  f^^'f^^g^.g 
that  an  employer  coming  in  from  abroad  is,  under  some 
systems,  subject  to  peculiar  obligations. 

For  example,  in  Germany  a  foreigner  temporarily  en- 
gaged in  business  may  be  required  to  double  the  normal 
contributions  to  the  proper  association  and  give  secu- 
rity (33). 

The  Hungarian  law  provides  that  an  undertaking 
whose  plant  extends  beyond  the  country  is  subject  to  in- 
surance in  one  state  only — the  location  of  the  principal 
office  being  the  controlling  factor.  If,  however,  the  under- 
taking has  a  permanent  representative  in  Hungary  the 
local  law  governs  the  Hungarian  workmen  (6). 

A  treaty  between  Germany  and  the  Netherlands, 
August  27,  1907,  deals  with  compensation  in  under- 
takings carried  on  in  both  states. 

Coming  to  migratory  workmen  we  first  consider  the  Migratory 

„     ,,?  ®  *^  citizens. 

case  of  citizens. 

Several  systems  provide  that  when  a  domestic  em- 
ployer employs  a  citizen  beyond  the  territory  the  com- 
pensation law  follows  the  person  unless  he  is  entitled  to 
compensation  under  the  foreign  law,  for  example,  Hun- 
gary (4). 

The  position  of  a  workman  or  his  dependants  who 
leave  the  country  during  the  term  of  an  accident  pension 
depends  on  the  statute.  Germany  continues  payment  so 
long  as  the  pensioner  reports  to  the  German  consul  (94). 
Great  Britain  stops  payment  except  in  case  of  permanent 
injury  (Sched.  I,  18).  In  Sweden  a  pension  is  suspended 
during  absence  (6).  In  some  countries  a  lump  sum  may 
be  reclaimed  in  settlement,  for  example,  Hungary  (76). 

In  this  relation  the  rule  in  federated  nations  is  of 
interest,  and  we  note  that  the  German  Empire  is,  for  this 


m 


purpose,  one  country.  The  Prussian,  the  Bavarian,  the 
Saxon,  moving  about  within  the  Empire,  may  draw  his 
pension  wherever  lie  happens  to  reside. 


Foreign 
workmen. 


Foreign  workmen  are,  as  a  rule,  within  the  benefits 
of  the  law,  and  if  they  become  pensioners  are  on  the  foot- 
ing of  citizens  so  long  as  they  remain. 

Some  laws  provide  that  if  they  leave  the  country  they 
may  receive  lump  sums  in  settlement — sums  amounting 
to  three  times  the  annual  pension  in  Germany  (95.2), 
France  (Ic). 

The  dependants  of  a  foreign  workman,  if  they  are  also 
residents,  usually  stand  in  his  shoes,  but  their  position 
may  depend  upon  the  practice  in  their  own  country,  for 
example,  France  (1  c),  Sweden  (6),  Germany  (21). 


Treaties.  lu  this  relation  we  note  that  recent  development  of 

international  law — conventions  dealing  with  various  in- 
dustrial conditions.  Among  them  are  several  which  con- 
fer reciprocal  benefits  in  the  matter  of  workmen's  compen- 
sation.^^ 

PARTIES  TO  ADMINISTRATION. 

The  parties  interested  in  a  workmen's  compensation 
scheme  are  the  state,  which  orders  compensation,  the  em- 
ployer, who  pays  it,  and  the  workman,  who  receives  it, 
and  it  is  of  interest  to  understand  to  what  extent  each 
participates  in  the  administration  of  representative  sys- 
tems. 


Public 
authorities. 


Under  the  British  Workman's  Compensation  Act  the 
Home  Secretary  may  appoint  medical  referees  and  certify- 
ing surgeons,  and  may  add  to  the  list  of  industrial  dis- 
eases.  County  court  judges  act  as,  or  appoint  arbitrators 

68See,  for  instance,  France-Italy,  June  9,  1906;  Dec.  23,  1907; 
Dec.  28,  1908;  France-Belgium,  Feb.  21,  1906;  see  also  Great 
Britain,  9  Edw.,  7  c,  10. 


47 

in  a  compensation  case  where  the  parties  do  not  agree. 
The  Registrar  of  Friendly  Societies  is  authorized  to  de- 
cide whether  a  compensation  arrangement  between  em- 
ployer and  employee  shall  be  substituted  for  the  Act.  The 
Post  OflQce  offers,  but  does  not  force  its  assistance  in  the 
matter  of  providing  annuities.  In  short,  the  Act  operates 
with  comparatively  little  intervention  by  the  state — a  con- 
dition accounted  for  by  anti-bureaucratic  traditions 
which,  though  somewhat  weakened  of  late  are  not  yet 
abandoned. 

On  the  continent  of  Europe,  where  bureaucracy  is 
thoroughly  established,  the  functions  of  government  are 
more  or  less  intimate. 

Coming  to  the  other  parties  interested,  we  find  that 
neither  the  British  nor  the  French  systems  afford  room 
for  either  employer  or  workman  to  undertake  formal  re-  Employer  and 

worlcm&n. 

sponsibility  for  administration,  with  the  important  quali- 
fication that  the  British  law  provides  for  a  registered 
agreement  between  them  by  which  most  claims  are 
settled. 

Germany  gives  to  the  employers  the  prominent  place 
in  administration.  Their  associations  are  the  keystone 
of  the  whole  system  and,  whilst  eificiently  supervised, 
are  granted  a  large  measure  of  self-government.  In 
Austria  and  Hungary  employers  are  substantially  rep- 
resented in  the  associations. 

While  the  German  workman  is  not  admitted  to  the 
employers'  associations,  representative  workmen  co-op- 
erate with  them  in  framing  regulations  for  the  prevention 
of  accidents  (113,  114),  and  are  given  a  place  in  the 
arbitration  courts  to  which  are  made  the  first  appeals 
(4,5). 

In  Hungary  workmen  are  represented  on  both  the 
major  and  the  minor  insurance  associations — the  Na- 
tional and  the  District  Funds — and  in  Austria  in  the 
trade  associations  of  each  district. 


48 


REVIEW  OF  FOREIGN  LAWS. 


Our  survey  of  foreign  laws,  short  as  it  is,  needs  an 
accentuation  of  several  points. 
Deliberation.  Each  countrv  has,  generally  speaking,  legislated  with 

deliberation — in  many  instances  after  years  of  study  and 
discussion. 


Fixed 
compensation. 


All  the  systems  confer  upon  the  workmen  within  their 
purview  a  legal  right  to  fixed  compensation  for  industrial 
accidents  not  caused  by  their  willful  act,  but  except  the 
English,  which  covers  all  workmen  except  the  "casual," 
they  generally  exclude  workmen  who  are  not  engaged  in 
"hazardous'^  employments. 


Burden  of 
compensation. 


The  right  to  compensation  everywhere  revolutionizes 
the  old  law  limiting  employer's  liability  to  cases  involving 
his  actual  or  at  most  his  constructive  fault.  It  is  based 
upon  the  novel  economic  dogma  that  industry  should  bear 
the  burden  of  its  accidents  by  compensating  the  victims. 

There  is  no  disposition  to  make  good  to  the  victim  the 
entire  loss.  Partial  indemnity  only  is  prescribed,  and 
this  is  generally  based  on  his  earning  capacity  as  evi- 
denced by  his  wages. 

The  compensation  is  usually  paid  by  the  employer 
(with  the  important  exception  of  the  German  sickness  in- 
surance funds  covering  a  large  proportion  of  accidents 
and  created  largely  by  workmen's  contributions)  and  the 
outlay  is  supposed  to  be  charged  to  cost  of  production. 


Arbitral 
procedure. 


All  the  leading  countries  except  Great  Britain  deny 
actions  for  damages  to  workmen  entitled  under  a  compen- 
sation law,  except  where  the  master  is  in  gross  fault. 

All  countries  eliminate  trial  by  jury  from  the  pro- 
cedure in  disputed  claims,  and  France  excepted,  the  more 
important  countries  do  not  prescribe  a  special  action  in 
the  ordinary  courts  but  provide  a  scheme  of  arbitration. 


49 

In  short,  the  maxim  "he  gives  twice  who  gives  quickly," 
so  conspicuously  pertinent  in  the  case  of  injured  work- 
men, is  reflected  in  as  summary  and  untechnical  a  pro- 
cedure as  is  deemed  compatible  with  justice  to  both 
parties. 

The  wider  the  distribution  of  the  burden  of  compensa-  insurance. 
tion  the  lighter,  of  course,  is  its  incidence  upon  individual 
employers  and  the  greater  the  security  of  the  beneficiaries. 
Distribution  implies  the  employment  of  some  method  of 
insurance,  and  the  several  systems  are  broadly  classified 
according  to  their  attitude  toward  insurance. 

Great  Britain  typifies  the  systems  which  officially  take 
no  account  of  insurance — each  employer  may  insure  or 
not  at  discretion  and  does  not  shift  his  personal  liability 
by  so  doing. 

France  typifies  another  sort  of  voluntary  insurance 
whereby  the  employer  may  shift  his  liability  by  insuring 
in  an  approved  institution. 

In  systems  of  the  third  class  insurance  is  compulsory 
and  may,  as  in  Germany,  be  necessarily  involved  in  the 
collective  liability  imposed  upon  groups  of  employers. 
Or,  as  in  the  Netherlands,  employers  may  be  required  to 
insure  in  designated  institutions. 

Except  in  Great  Britain  and  some  of  her  dependencies 
it  is,  generally,  the  rule  that  insurance  by  a  prescribed  or 
approved  method  discharges  the  employer  from  personal 
responsibility  for  compensation. 

The  systems  of  Continental  Europe  are,  as  a  rule,  more  Broad 

,  •    .,  ,  .       _  comparisons. 

highly  organized  and  more  thoroughly  worked  out  than 
the  British  system,  which,  indeed,  is  crude  in  comparison. 
And  a  reason  for  this  difference  is  that  the  state  socialism, 
which  underlies  all  systems,  thrives  best  in  communities 
accustomed  to  paternalism  and  disciplined  to  bureau- 
cracy. 


50 

The  laws  of  the  several  countries  agree  in  their  gen- 
eral aim.  Certain  classifications  by  groups  are  more  or 
less  marked.  Instances  of  borrowing  and  adaptation  are 
many.  But  in  the  last  analysis  each  country  has  gravi- 
tated to  a  system  w^hose  spirit  and  form  are  commended  by 
racial  and  political  characteristics,^®  by  local  habits  and 
customs.  Broadly  speaking  it  appears  that  those  systems 
work  most  smoothly  where  existing  institutions  of  one 
kind  and  another  capable  of  facilitating  their  purpose 
have  been  skillfully  utilized  to  this  end. 

II. 

GENEKAL  CONSIDERATIONS  ON  COMPULSORY 
COMPENSATION. 

What  is  the  origin  of  compulsory  compensation  laws? 
What  is  their  argument? — their  status? — their  effect? 

ORIGIN — THE  GERMAN  SYSTEM. 

William  I.  The  message  of  William  I.  of  Nov.  17,  1881,  first  em- 

phasized the  concern  of  the  modern  state  in  systematic 
compensation  for  industrial  accidents,  though  in  March 
of  that  year  a  bill  was  presented  to  the  Reichstag  requir- 
ing employers  in  certain  industries  to  compensate 
injured  workmen  without  regard  to  the  cause  of  injury, 
but  differing  radically  from  the  system  finally  adopted  in 
not  providing  for  insurance  of  the  obligation. 

"We  consider  it  our  Imperial  duty,''  said  the  Emperor, 
"to  impress  upon  the  Reichstag  the  necessity  of  furthering 
"the  welfare  of  the  working  people.  We  should  review 
"with  increased  satisfaction  the  manifold  successes  with 
"which  the  Lord  has  blessed  our  reign,  could  we  carry 
"with  us  to  the  grave  the  consciousness  of  having  given 
"our  country  an  additional  and  lasting  assurance  of  in- 

^^An  interesting  instance  is  the  influence  of  the  French  com- 
pensation law  upon  the  law  of  Quebec.    See  also  p.  44,  note. 


61 

"ternal  peace,  and  the  conviction  that  we  have  rendered 
"to  the  needy  that  assistance  to  which  the.v  are  justly 
"entitled.  *  *  *  In  order  to  realize  these  views  a  Bill 
"for  the  insurance  of  workmen  against  industrial  acci- 
"dents  will  first  of  all  be  laid  before  you,  after  which  a 
"supplementary  measure  will  be  submitted  providing  for 
"a  general  organization  of  Industrial  Sick  Belief  Insur- 
"ance.  But  likewise  those  who  are  disabled  in  conse- 
"quence  of  old  age  or  invalidity  possess  a  well  founded 
"claim  to  a  more  ample  relief  on  the  part  of  the  State 
"than  they  have  hitherto  enjoyed." 

The  programme  of  the  message  was  not  carried  out  in  social insur- 

ance  legisla- 

precisely  the  order  suggested.     An  accident  bill  presented  tion. 
in  1883  failed  to  pass,  and  the  sickness  insurance  law  of 
June  15,  1883  was  first  on  the  list. 

An  accident  law,  including  generally  the  industries 
utilizing  mechanical  power,  was  passed  July  6,  1884.  To 
these  industries  were  added  agriculture  and  forestry  on 
May  5,  1880,  building  operations  on  July  11,  1887,  and 
marine  transportation  on  July  13,  1887.  Invalidity  and 
old  age  insurance  laws  were  enacted  June  22,  1889. 

The  accident  fund  is  wholly  furnished  by  the  em- 
ployers. To  the  sickness  fund  the  employers  contribute 
one-third  and  the  workmen  two-thirds.  Employers  and 
workmen  contribute  half  and  half  to  the  invalidity  and 
old  age  pensions  and  the  Empire  adds  fifty  marks  to  each 
annuity  besides  paying  the  workmen's  contributions  dur- 
ing their  military  service. 

The  grouping  of  sickness,  invalidity  and  old  age  with 
accident  as  equally  deserving  the  state's  concern  demon- 
strates the  wide  reach  and  the  logical  consistency  of  the 
German  system. 

It  is  interesting  to  note  that  while  old  age  pensions 
and  accident  and  invalidity  insurances  are  regulated  by 


52 

imperial  authority  the  sickness  insurance  is  largely  ad- 
ministered by  the  several  States  of  the  Empire*^^  appar- 
ently because  existing  local  institutions  could  be  advan- 
tageously employed  in  administering  it. 

Bismarcica  While  according  to  humanitarianism  its  large  part  in 

the  motive  of  the  compensation  law  we  must  not  fail  to 
mark  the  diplomacy  which  so  greatly  facilitated  its  en- 
actment. The  insurance  laws  expressed  Bismarck's  pur- 
pose to  countermine  a  threatening  democratic  socialism 
by  an  autocratic  socialism  designed  to  placate  witli 
material  benefits  a  proletariate  to  be  persistently  denied 
full  political  rights.  Professor  Menger  says:  "The  real 
benefit  of  this  economic  protection  may  be  at  all  times 
lessened  or  even  obliterated  by  import  duties,  tax  exemp- 
tions, export  bounties  and  like  favors  granted  to  the 
upper  classes. "^^ 

Bismarck's  social  policy  has  not  prevented  a  vast 
increase  of  democratic  socialism  whose  revolutionary 
zeal  has,  however,  become  largely  tempered  by  a  philo- 
sophic patience.  German  socialism  is  today  rather  a 
creed  than  a  war  cry. 

The  persistence  of  Bismarck's  political  policy  is  shown 
by  the  returns  of  the  parliamentary  election  of  1908.  The 
Socialists  cast  about  600,000  votes  or  about  23  per  cent, 
of  the  whole  and  elected  7  members.  The  Conservatives 
casting  about  350,000  votes  elected  152  out  of  443. 

If  the  social  insurance  laws  were  actually  created 

by  the  stroke  of  a  masterful  statesman  they  were  a 

step  or  rather  a  leap  in  a  direction  the  German  people 

had   long   faced.      In   guilds,    in   an    intimate   relation 

between  master  and  servant,  in  mutual  aid  associations 

Dr.  schmoiier.  Dr.  Schmollcr  indicates  the  precursors  of  the  insurance 
system.  He  points  out  that  Germany  maintained 
to  a  much  later  date  than  her  progressive  neighbors 

^^Laband,  Droit  Public  de  V Empire  Allemand,  IV,  p.  6. 
'^'^UMat  Socialiste,  p.  359. 


53 

the  old  industrial  order  and  plunged  into  modern  in- 
dustry with  habits  and  organisms  which  though  inade- 
quate to  meet  the  novel  strain  were  capable  of  useful 
adaptation.  In  short  he  says  that  the  relief  associations 
of  the  middle  and  lower  classes  were  between  1840  and 
1900  transformed  into  a  vast  system  of  social  insuranceJ^ 

Surveying  the  political  setting  of  the  German  insur-  The  German 

^     _       ,  ,  environment. 

ance  system  we  find  what  at  the  moment  is,  perhaps,  the 
fairest  field  in  the  world  for  the  working  out  of  a  vast 
and  complicated  scheme  for  relieving  misfortunes  by  a 
plan  neither  so  niggardly  as  to  be  delusive  nor  so  bounti- 
ful as  to  be  demoralizing.  Here  is  a  people  enjoying  in 
large  measure  the  steadying  influence  of  tradition  and 
custom,  yet  alive  with  a  youthful  enterprise  which  has 
brought  a  sudden  and  a  great  prosperity. 

We  have  here  an  industrious  and  intelligent  proletar- 
iate whose  discontented  element  is  held  in  check  by  a 
powerful  military  caste  and,  of  peculiar  value  to  the  oper- 
ation of  the  insurance  laws,  a  bureaucracy  whose  officials 
"form,"  says  Bluntschli,  "a  veritable  professional  order 
"with  the  consciousness  of  their  solidarity ;  and  they  have 
"the  importance  of  a  political  power.  The  head  of  the 
"State  and  the  representatives  of  the  people  must  reckon 

"with  them  and  cannot  dispense  with  their  co-opera- 
tion."^3 

In  short  the  German  insurance  system  flourishes  in  a 
peculiarly  fit  environment — a  well-disciplined,  or,  as  we 
should  say,  an  over-governed  community. 

Other  countries  have,  in  following  Germany^s  lead,  Germany's 
chosen  methods  usually  differing  materially  from  the  ^"*' 
original,  but  one  and  all  have  adopted  the  fundamental 
principle  of  the  German  law — systematic  compensation 
as  opposed  to  casual  suits  for  damages.    This  principle  is 

"^^Principes  d':Sconomie  Politique,  IV,  pp.  186,  208,  240. 
73Theory  of  the  State,  p.  602. 


54 

one  of  Germany's  gifts  to  the  world,  and  her  system  is  the 
standard  of  comparison  for  all  countries. 

THE    ARGUMENTS    FOR    COMPULSORY    COMPENSATION. 

The  modern  community  is  said  to  be  peculiarly  pressed 
to  enact  compulsory  compensation  because  of  what  is 
assumed  to  be  an  increased  hazard  incident  to  the  imple- 
ments and  organization  of  modern  industry.  Upon  this 
assumption  are  based  questionable  assertions. 


MODERN 

HAZARDS, 

ETC. 


It  is  asserted  that  the  common  law  rules  of  employer's 
liability,  however  fitting  in  an  earlier  day,  fail  to  meet 
the  conditions  of  the  modern  industrial  system  with  its 
large  employment  of  workmen  in  dangerous  trades. 

Is  it  not  unfair  to  say  that  modern  hazards  discredit 
the  old  rules  of  law?  If  these  rules  are  essentially  unjust 
to-day  they  were  quite  as  unjust  in  their  earlier  environ- 
ment. For  hazardous  employments  are  no  new  thing. 
In  sailing  on  the  sea,  in  building  above  the  ground  and 
burrowing  into  it  workmen  have  from  time  immemorial 
risked  their  lives,  and  all  things  considered  it  is  not  im- 
probable that,  in  the  older  employments,  the  risks  are  less 
to-day  than  in  the  rude  conditions  of  earlier  times. 
Modern  methods  have  reduced  the  risk  in  many  industries 
— the  Plimsoll  line,  the  Davy  lamp,  for  instance — and  im- 
proved medicine  and  surgery  have  mollified  thousands  of 
casualties. 


Corporate 
influence. 


It  is  asserted  that  corporate,  as  distinguished  from 
the  individual  management  of  an  earlier  day  is  largely 
responsible  for  existing  accident  conditions.  If  the  re- 
moteness of  stockholders — owners — from  their  workmen 
and  the  nominally  impersonal  administration  of  great 
establishments  give  some  substance  to  the  charge,  is  it  not 
outweighed  by  the  fact  that  concentration  of  industry 
into   large  corporations   bespeaks  a  notable  faculty   of 


55 

organization  and  a  wide  range  of  activity  that  give  a 
better  opportunity  to  promote  workmen's  welfare  than 
obtained  when  a  multitude  of  small  concerns  competed 
strenuously  in  narrower  markets? 

Whether  accident  conditions  are  better  or  worse  than  Past  and 

present. 

aforetime — whether  the  locomotive  and  the  live  wire  have 
relatively  increased  disablement,  are  quite  beside  the 
mark.  It  is  enough  to  realize  that  conditions  are  serious 
— in  some  ways  increasingly  serious,  we  shall  see,  despite 
compensation  schemes — and  that  the  modern  community 
seems  more  sensitive  to  human  suffering  than  its  pred- 
ecessors and,  assuredly,  is  more  confident  of  ability  to 
relieve  it. 

The  prominent  argument  for  the  compensation  laws  industry 
is  that  industry  ought  to  bear  a  part  of  the  loss  inflicted  bear  cost 

OF  ACCI- 

upon  workmen  by  accident  instead  of  letting  this  press  dent. 
wholly  upon  them,  and  in  making  the  employer  the  pay- 
master, it  is  assumed  that  the  expense  will  be  passed  on 
to  the  consumer  as  an  item  of  cost  of  production. 

Who  are  the  consumers  to  be  charged  with  the  ulti-  who  are  the 
mate  payment  of  compensation?  Many  current  proposi- 
tions for  social  reform  gyrate  on  the  notion  that  the 
capitalist,  the  workman  and  the  consumer  represent  three 
distinct  classes,  and  they  intend  that  the  first  and  the 
last  shall  be  burdened  for  the  benefit  of  the  second.  In 
reality  there  is  no  such  rigid  segregation.  The  work- 
men themselves  are  the  largest  consumers  of  each  other's 
products,  and  they  bear  their  share  of  any  increase  in 
price.  This  share  is  borne  directly  when  the  workman  is 
the  actual  buyer.  It  is  borne  indirectly  when  his  em- 
ployer is  the  buyer. 

After  making  all  allowances,  how^ever,  there  remains 
a  large  class  which  may,  in  this  relation,  be  fairly  dis- 
tinguished as  consumers.  But  it  is  not  a  patient  class 
upon  whom  the  producer  may  lay  all  additions  to  cost 


56 


without  bearing  the  penalty  of  a  shrinking  market,  and 
this  is  especially  true  when  the  addition  is  due  to  legisla- 
tion, and  not  to  natural  causes.  Indeed,  those  public 
service  companies  which  would  be  so  markedly  affected 
by  a  substantial  increase  in  accident  cost  are  being  sub- 
jected to  a  control  in  the  matter  of  rates  which  makes 
them  the  more  solicitious  to  avoid  compulsory  additions 
to  cost  of  service. 


Distribution 
of  burden. 


"Parasitic' 
trades. 


Even  where  employers  are  legally  free  to  fix  prices  at 
discretion,  increasing  the  cost  to  the  consumer  without 
loss  to  the  producer  and  his  workmen  is  generally  more 
easily  said  than  done. 

How  shall  a  compensation  law  actually  deal  with 
"industry'^  which  is  to  bear  the  cost  of  the  accidents? 

Industry  is  actually  divided  into  a  multitude  of  units 
of  infinite  variety — ranging  in  size  from  the  workshop  to 
the  establishment  with  tens  of  thousands  of  workmen,  in 
purpose  from  digging  a  ditch  to  operating  a  railroad,  and 
among  units  of  the  same  class  there  are  marked  differ- 
ences in  financial  condition  in  character  of  employees 
and  in  business  efficiency. 

If  a  law  proceeding  on  the  theory  that  industry  should 
bear  the  accident  loss  takes  no  account  of  the  individual 
incidence  of  the  burden,  it  will  lead  to  gross  inequalities 
in  respect  of  particular  trades  and  particular  establish- 
ments. In  these  circumstances  many  employers  would 
be  justified  in  complaining  that  their  business  is  not 
able  to  bear  the  strain,  but  here  we  encounter  the 
charge  that  an  industry  or  a  plant  unable  to  bear  the  cost 
of  its  accidents  is  "parasitic" — something  which  if  it  can- 
not be  mended  would  better  be  ended. 

"Parastic"  aptly  describes  an  economic  defect  in- 
herent in  all  immoral  traffic  and  of  the  useful  trades 
with  which  we  are  concerned  one  or  another  may,  con- 
ceivably, fall  into  this  low  estate,  but  the  term  as  em- 
ployed in  the  small  change  of  socialist  argument,  is  in- 


57 

tended  to  describe  and  discredit  our  whole  industrial 
system. 

Reviewing  the  proposition  that  industry  shall  bear  the  Review, 
cost  of  its  accidents  we  find  that  its  substitution  for  the 
common  law  rules  is  reasonable  only  where  the  respon- 
sibility for  compensation  is  so  widely  distributed  as  to 
preclude  serious  loss  to  a  careful  master. 

This  means  a  system  of  insurance  wherein  individual 
ability  to  bear  the  burden  is  to  be  measured  by  that  car- 
dinal principle  of  all  insurances — distribution  of  risk. 
In  short,  a  burden  theoretically  borne  by  an  industry  as 
a  whole  will  bear  unequally  upon  the  individual  units. 
A  burden  actually  borne  by  an  industry  as  a  whole  will 
be  more  equally  distributed  among  the  units. 

If  a  fair  distribution  of  risk  be  assured  the  main 
proposition  has  a  decided  value  as  a  working  basis  for 
systematic  compensation,  whether  compulsory  or  volun- 
tary. But  Great  Britain  has  already  forged  ahead  of  the 
proposition.  She  has  affirmed  the  right  of  every  injured 
servant  to  compensation  from  the  master ;  and  in  the  case 
of  domestic,  or  other  uncommercial  service  there  is  no 
cost  of  production  to  be  passed  on. 

THE  STATUS  OF  THE  COMPENSATION  LAWS. 

Workmen's  compensation  laws  are  broadly  classed  social 

^  "^  Insurances. 

with  what  are  called  the  "social  insurances."  They  are 
but  one  branch  of  a  comprehensive  project  widely  dis- 
cussed, and  in  some  countries  already  far  advanced  for 
the  compulsory  relief  of  hardships  due  to  involuntary 
cessation  or  interruption  of  work  by  reason  of  old  age, 
invalidity,  sickness,  maternity,  accident,  lack  of  employ- 
ment, etc. 

Social  insurance  laws  are  obviously  intended  to  re-  pauper  relief, 
lieve  indigence,  but  they  disclaim  affiliation  with  pauper 


or 


58 

legislation.  According  relief  in  consideration  of  past 
service  or  in  expectation  of  future  service  and  not  as 
a  dole  they  distinguish  industrial  disablement  from 
pauperism  and  they  propose  to  relieve  the  one  without 
encouraging  the  other. 

Not  many  years  ago  few  thoughtful  men  of  affairs 
would  have  deemed  this  proposal  feasible  on  any  large 
scale,  but  the  attitude  of  many  to-day  is  fairly  stated  by 
an  English  writer,  who,  after  surveying  poor  relief,  old 
age  pensions,  workmen's  compensation,  etc.,  says:  "This 
"brief  analysis  of  the  progress  of  thought  and  policy  in 
"relation  to  destitution  testifies  clearly  to  a  change  in  the 
"dominant  conception  of  society.  We  find  first,  a  growth 
"of  the  belief  that  every  member  of  society  has  an  equit- 
"able  claim  against  it,  if  it  acts  so  imperfectly  that  he 
"cannot  by  reasonable  diligence  and  honesty,  maintain 
"himself  and  his  family  in  tolerable  comfort.  Secondly, 
"it  may  be  noticed  that  a  different  view  of  psychological 
"effects  of  destitution  and  relief  prevails.  On  the  one 
"hand  it  is  held  that  want  is  as  destructive  of  character 
"as  charity,  if  it  passes  beyond  that  just  measure  of 
"economic  pressure  which  gets  the  work  of  the  world  per- 
"formed.  On  the  other  hand  it  is  thought  possible  that 
"the  relief  of  evils  which  are  unavoidable  by  individuals 
"of  normal  intelligence,  character  and  earning  capacity, 
"may  be  so  far  assimilated  to  other  sides  of  collect ivist 
"practice  as  to  rob  it  of  any  deteriorating  influence  on 
"those  who  are  relieved."^* 

In  the  development  of  this  modern  idea  there  is  a  nota- 
ble difference  of  opinion  in  regard  to  the  position  of  the 
beneficiaries.  Great  Britain,  clinging  to  the  spirit  of  the 
poor  laws,  exacts  no  contribution  from  the  beneficiaries 
of  her  old  age  pension  and  compensation  law^s. 

On  the  continent,  however,  workmen  contribute  to 
social  insurances  generally  and  in  some  cases  to  accident 

^^Meredith,  Economic  History  of  England,  p.  293. 


59 

compensation  J^  And  the  old  age  pension  law  just  enacted 
in  France  is  notable  for  its  sound  requirement  of  con- 
tributions from  the  beneficiaries.'^^ 

Insisting  that  differentiation  from  poor  relief  must  be 
conspicuous  in  fact  if  social  insurance  is  not  to  encourage 
pauperism,  we  make  no  difficulty  about  its  accuracy  in 
point  of  law  and  shall,  therefore,  assume  that  compensa- 
tion acts  are  not  to  be  classed  with  pauper  legislation. 
But,  while  we  distinguish  compensation  laws  from 
poor  laws  in  spirit  and  in  method,  we  must  clearly  mark 
their  common  end — relief  of  destitution. 

The  New  York  Employers  Liability  Commission  not 
only  emphasizes  this  point,  but  squarely  recognizes  com- 
pensation as  an  alternative  is  poor  relief.  It  imagines 
the  state  saying  to  the  employer,  "The  good  of  the  com- 
munity makes  it  essential  that  your  business  shall  go 
on,  but  likewise  essential  that  you  should  share  the 
burden  of  loss  from  accident  with  the  workers  so  that 
these  citizens  of  the  state  may  not,  by  this  trade  risk, 
from  which  you  largely  profit,  become  destitute  or  charges 
on  the  public.'''^^ 

The  practice  of  accident  compensation  differs  mate-  peculiarity  of 
rially  from  that  of  the  other  social  insurances  in  this  re-  peLauon^™' 
spect — that  while  in  the  other  cases  the  pecuniary  bur- 
den is  either  assumed  by  the  state  or  apportioned  between 
the  state,  the  employer  and  the  beneficiary,  in  the  case  of 
accident  it  is  invariably  imposed  upon  the  employer,  with 
here  and  there  a  contribution  from  the  workman. 

From  a  political  viewpoint  workmen's  compensation  socialism. 
legislation  is  "socialistic.''     But  it  is  not  the  socialism 
of  the  socialist.     It  is  the  pseudo-socialism  of  the  state. 


"See  p.  22. 

^®See  Quart.  Jour,  of  Economics,  Aug.,  1910. 

^''Eeport,  p.  52.  The  preamble  to  the  Maryland  Act  (see  p.  79) 
goes  further.  If  indeed  it  be  "the  duty  of  the  Government  to  pro- 
vide sustenance"  for  the  victims  in  question  how  can  the  tax- 
paying  community  shift  this  obligation  to  a  special  class  arbi- 
trarily defined.  Who  ever  heard  of  such  a  class  being  singled  out 
for  poor  relief? 


60 


As  state  socialism  it  is  frankly  recognized  not  only  by 
statesmen  but  by  jurists.  "The  socialist  doctrine  of  the 
state,"  says  Dr.  Laband,  "according  to  which  the  state 
should  not  only  guarantee  to  its  citizens  the  protection 
of  its  codes,  but  also  the  material  sustenance  of  life 
has  found  partial  application  in  the  workmen's  insurance 
laws."^^ 

"State"  socialism,  however,  hardly  covers  a  case 
where,  as  in  the  accident  laws,  the  state  makes  no  con- 
tribution. In  the  placing  of  this  burden  upon  the  employ- 
ing class  we  mark  a  nearer  approach  to  real  socialism, 
especially  when  the  selection  of  industries  gives  a  peculiar 
privilege  to  employees  of  supposedly  rich  employers. 

Legal  status.  Comiug  to  the  legal  status  of  compensation  laws  we 

quote  Dr.  Laband's  comment  on  the  German  law :  "Thelm- 
"perial  legislation  starts  from  this  idea — that  the  under- 

Dr.  Laband,  "taker  of  an  enterprise  who  employs  workmen  in  order 
"to  appropriate  to  himself  the  economic  value  of  the  fruits 
"of  their  labor  owes  them  not  only  the  agreed  wages  for 
"this  labor,  but  ought  also  to  bear  with  them  the  risks 
"of  accident  resulting  from  this  labor.  This  conception 
"has  not  taken  the  shape  of  a  principle  of  private  law 
"which  governs  the  relations  resulting,  in  a  juridical 
"sense,  from  the  labor  contract;  it  has  become  one  of  the 
"tasks  laid  upon  the  State  to  take  care  of  the  victim  of  an 
"industrial  accident  or  of  those  he  leaves  behind  him ;  and 
"this  task  is  accomplished  with  the  means  aud  according 
"to  the  forms  dictated  by  public  law.  The  right  of  the 
"workman  to  the  solicitude  of  the  State  is  therefore 
"wholly  independent  of  an  agreement  relating  to  his  work 
"and  the  clauses  it  contains;  he  enjoys  this  right  even 
"when  there  is  no  agreement  of  this  sort  and  this  conven- 
"tion  can  neither  modify  this  right  or  deprive  him  of  it. 
"So,  this  right  is  not  founded  on  a  fault  committed  by 
"the  master  or  one  of  his  employees,  and  even  a  fault  of 

"^^Droit  Public  de  V Empire  Allemand,  IV,  12. 


*^ttie  workman  does  not  affect  it  at  all  unless  he  has  in- 
^'tentionally  caused  the  accident.  The  obligation  to  aid 
"the  workmen  is  not  a  legal  obligation,  or  what  is  called 
"a  ^state  obligation'  of  the  master  toward  his  workmen, 
"for  master  and  workman  are  not  set  against  one  another 
"like  debtor  and  creditor,  and  they  are  powerless  to  vary 
"the  right  of  one  to  aids  and  the  obligation  of  the  other 
"to  give  them.  The  workmen  or  their  survivors  receive 
"the  aids  which  come  to  them  by  an  intermediary  that  the 
"Empire  of  the  State  has  delegated  to  perform  this  duty, 
"an  intermediary  who  has  with  them  no  private  legal  rela- 
"tion,  who  simply  performs  a  public  administrative  func- 
"tion,  confided  to  him  by  imperial  order,  when  he  de- 
"termines  the  indemnity  to  be  given  to  the  workmen  or 
"effects  its  payment."'^^ 

Dr.  Laband  points  out,  however,  that  in  case  a  law 
imposes  only  an  obligation  to  make  compensation  leaving 
the  insurance  of  the  risk  a  separate,  subsequent  and  dis- 
cretionary affair,  the  obligation  alone  falls  within  public 
law — whatever  may  be  done  in  the  way  of  insurance  falls 
within  private  law. 

The  upshot  is  that  the  German  accident  scheme,  though 
in  fact  it  compels  the  employer  to  supplement  wages  by 
compensation,  is  within  the  sphere  of  public  law  and  is 
not  supposed  to  interfere  with  or  even  regulate  the  pri- 
vate labor  contract,  for  the  simple  reason  that  this  con- 
tract is  set  in  another  sphere. 

"Public  law,"  while  not  unknown  in  English  jurispru-  The  British 

law. 

dence,  is  not  employed  in  the  Continental  sense  as  indicat- 
ing a  sphere  of  obligation  wholly  distinct  from  that  of 
"private  law" — as  a  law  meeting  the  needs  of  a  personi- 
fied state  and  applied  largely  by  administrative  as  dis- 
tinguished from  judicial  officers. 

The  British  Workmen's  Compensation  Act  is,  in  point 
of  law,  simply  a  statutory  regulation  of  the  relation  of 

''^Droit  Public,  etc.,  IV,  p.  35. 


62 

master  and  servant.     It  involves  a  substantial  interfer- 
ence with  the  private  labor  contract. 

EFFECTS  OF  COMPENSATION  LAWS. 

The  immediate  results  of  the  foreign  compensation 
laws  in  the  way  of  relief  and  the  cost  thereof,  their  bearing 
upon  the  condition  of  the  workmen  and  especially  on  the 
accident  rate,  and  their  general  effect  on  the  community 
suggest  a  line  of  investigation  which  this  brief  can  neither 
wholly  ignore  nor  yet  thoroughly  pursue — which  it  can 
only  touch  in  a  general  way. 

MEASURE  AND  COST  OF  RELIEF. 

Grand  totals  lu  Germany,  from  1885  to  1907,  about  four  hundred 

meaning!  millious  of  dollars  of  accident  compensation  have  been 
paid  to  a  multitude  of  workmen  and  their  dependents. 
To  this  must  be  added  the  large  sum  paid  under  the  sick- 
ness insurance  system  for  minor  accidents. 

When  to  these  figures  are  added  those  of  other 
countries  we  have  a  vast  body  of  beneficiaries  who  have 
received  an  enormous  sum  almost  entirely  made  by  em- 
ployers' contributions. 

Unquestionably  a  great  part  of  this  sum  has  in  strict 
accordance  with  the  theory  of  the  laws  been  paid  finally 
by  consumers,  and  so  has  contributed  to  that  increased 
cost  of  living  which  is  quite  as  marked  abroad  as  at 
home. 

Of  the  remainder  it  is  altogether  probable  that  a  por- 
tion has  been  imposed  on  the  wage  account  not  so  much 
perhaps  by  actual  reductions  as  by  retarding  advances. 
The  rest  is  borne  by  individual  employers  in  the  shape 
of  decreased  profits  or  even  of  substantial  losses. 

Cost.  The  following  extract  from  a  report  on  the  working 

of  the  British  Compensation  Act  is  of  interest:  "This 


year  there  are  available  for  the  first  time  substantially 
complete  returns  from  the  seven  great  groups  of  indus-  British 
tries — mines,  quarries,  railways,  factories,  harbors  and  19^,9"™^' 
docks,  constructional  works,  and  shipping.  These  re- 
turns furnish  materials  for  a  general  review  of  the  work- 
ing of  the  Compensation  Act  of  1906  in  relation  to  the 
main  body  of  the  industries  of  the  United  Kingdom.  In 
these  seven  groups  of  industries,  the  number  of  employers 
included  in  the  returns  was  117,391,  and  the  average 
number  of  persons  employed  coming  within  the  provisions 
of  the  Act  was  over  6%  millions,  of  whom  over  4% 
millions  come  under  the  heading  ^factories.'  In  these 
industries  in  the  year  1909  compensation  was  paid  in 
3,341  cases  of  death  and  in  332,612  cases  of  disable- 
ment. The  average  payment  in  case  of  death  was  £154, 
in  case  of  disablement  £5  6s.  The  annual  charge  for  com- 
pensation, taking  the  seven  groups  of  industries  together, 
averaged  6s.  lOd.  per  person  employed.  It  was  lowest 
in  the  case  of  persons  employed  in  factories,  being  only 
3s.  5d.  per  person;  in  the  case  of  railways  it  was  7s.  Id. ; 
it  rose  to  9s.  2d.  in  quarries,  to  lOs.  8d.  in  shipping,  and 
to  14s.  lid.  in  constructional  works;  it  was  highest  in 
docks,  16s.  8d.,  and  in  mines,  20s.  Id.  It  is  noteworthy 
that  in  the  coal  mining  industry  the  charge  arising  under 
the  Act  works  out  at  about  0.8d.  only  per  ton  of  coal 
raised."  (The  coal  charge  for  1908  was  about  0.7d.  per 
ton  and  the  compensation  about  17s.  per  head. )  ^^ 

While  in  no  country  has  there  been,  I  believe,  any  sub- 
stantial increase  in  the  rate  of  compensation  originally 
adopted  there  is  reason  to  believe  that  taking  the 
countries  by  and  large  the  average  expense  per  claim  has 
increased. 

This  is  conspicuously  illustrated  in  Germany  where 
the  statistics  of  cost  are  thoroughly  worked  out  and  cover 
the  longest  period. 

soBlue  Book  (cd.  5,386),  London  Times,  Oct.  13,  1910. 


64 

In  1902  the  average  compensation  per  case  was,  in 
marks,  128,7,  in  1906  132,35,  and  the  average  charges  for 
each  person  insured  7,1  and  8,63.®^ 

It  should  be  noted  also  that  so  far  as  a  compensation 
law  imposes  upon  employers  continuing  obligations  by 
way  of  pensions  or  otherwise,  each  year's  additions  will 
substantially  increase  the  aggregate  cost  until,  at  a  dis- 
tant date,  these  shall  be  offset  by  terminating  pensions. 

LITIGATION. 

That  compensation  laws  have  not,  even  when  coupled 
with  wider  social  insurances,  promoted  industrial  peace 
is  demonstrated  by  the  industrial  conditions  abroad.  In 
their  best  estate  these  laws  have,  in  relation  to  industrial 
conflict,  done  no  more  than  deal  with  a  factor  of  dis- 
content in  a  broad-minded,  business-like  way.  Yet  in 
doing  this  they  have  done  much. 

Considering  the  relation  of  these  laws  to  actual  litiga- 
tion it  must  be  understood  that  systematic  compensation 
in  its  compulsory  form  does  not  mean  automatic  com- 
pensation. Since  the  very  change  from  liability  for  a  few 
accidents  to  responsibility  for  all  multiplies  opportuni- 
ties for  controversy,  the  number  of  disputes  over  accidents 
has  increased.  So  far  as  this  increase  is  concerned  with 
the  interpretation  of  a  new  statute — witness  the  British 
Compensation  Act — it  ought  to  simmer  down  as  point 
after  point  is  settled  unless  recurring  amendments  keep 
the  pot  boiling. 

But,  after  general  principles  are  fairly  settled,  there 
may  still  remain  much  litigation  over  their  application — 
witness  the  experience  of  Germany  where  a  substantial 
percentage  of  claims  is  carried  to  the  arbitration  tribu- 

s^It  should  be  noted,  however,  that  the  employers  associations 
have  reduced  the  ratio  of  cost  of  management  to  compensation  paid. 
In  1886  the  average  percentage  was  28.49.  In  1907  the  percentage 
was  16. — Frankel  and  Dawson,  111. 


65 

nals  and  a  goodly  number  taken  on  appeal  to  the  Im- 
perial Insurance  Office. ^^  Great  Britain  seems  to  make 
a  better  showing.  A  Blue  Book  giving  the  returns  of 
the  Compensation  Act  for  1909  shows  that  the  number 
of  claims  settled  judicially  is  less  than  one  in  five  in 
fatal  cases  and  less  than  one  in  two  hundred  in  cases 
of  disablement.^^ 

If  a  compensation  law  increases  the  actual  volume 
of  controversy,  it  should,  however,  improve  its  tone,  pro- 
vided the  methods  are  simple,  certain,  and  above  all,  ex- 
peditious as  compared  with  actions  at  common  law.  This 
improvement  should  be  most  marked  in  countries  where 
actions  are  forbidden  except  in  case  of  the  master's  gross 
fault.«^ 


THE    ACCIDENT    RATE. 


accidents. 


Statistics  emphatically  disprove  the  plausible  argu- increase  of 
ment  for  the  compensation  laws  that  they  tend  to  pre- 
vent accidents  by  making  the  employer  more  solicitous 
for  the  safety  of  his  workmen. 

The  course  of  accidents  in  Germany  for  sixteen  years 
is  shown  in  the  following  table  :^^ 

1890        1906 
New  accidents  compensated 100,250    936,491 

Per  1,000  insured. 

New  accidents 3.03  6.67 

Fatalities    0.44  0.43 

Permanent  total  incapacity 0.20  0.07 

Permanent  partial  incapacity 1.65  2.93 

Temporary    partial    incapacity    more 

than  13  weeks 0.74  3.24 

®2See  Frankel  and  Dawson,  p.  109. 

83iV.  r.  Jour,  of  Commerce,  Oct.  25,  1910. 

8*See  p.  24. 

^^Bulletin  des  Assurances  Sociales,  1908,  No.  1,  p.  82. 


66 

In  1898  a  compensation  law  was  enacted  in  France, 
and  there  were  recorded  in  1904,  222,124  accidents,  and 
in  1907,  359,947,  or  52.8  and  96.1  per  1,000  workmen 
included.  And  of  serious  accidents  there  were  in  1900, 
6,543;  in  1904,  15,305,  and  in  1907,  26,138.8^  In  the 
textile  industry  accidents  increased  41%  in  three  years, 
and  in  the  years  1900-1906,  permanent  disablements  in- 
creased 100%  in  metal  working  and  250%  in  the  build- 
ing trade.  ^^ 

In  Great  Britain  the  reports  under  the  Factories  and 
Workshops  Act  alone  show  for  the  years  1897  and  1907, 
respectively,  fatal  accidents,  658  and  1,179;  non-fatal, 
39,816  and  123,230. 

A  writer  in  the  Bulletin  des  Assurances  Sociales 
quotes  from  the  Popolo  Romano,  "Despite  the  great  prog- 
ress of  Italian  industry  in  general  no  industry  has  pros- 
pered so  brilliantly  as  the  accident  industry,"  and  he 
cites,  for  example,  a  company  who  for  one  class  of  work- 
men recorded  155  accidents  among  450  men  prior  to  the 
compensation  law,  and  in  1907,  607  among  637.^^ 

In  Austria  there  were  recorded  in  1895,  448.4  accidents 
per  10,000  full-time  workmen,  and  in  1900,  631.9.«» 

The  foregoing  figures  seem  to  be  fairly  typical  of 
prevalent  conditions.  If  they  are  to  be  taken  at  their 
face  it  might  be  argued  that  compensation  laws  substan- 
tially raise  the  workman's  risk — the  employer,  being  able 
to  reckon  and  chaTge  off  the  cost  of  accident,  becoming 
less  mindful  of  the  workman's  safety,  and  the  workman, 
being  assured  of  compensation,  becoming  less  careful. 
But  a  marked  increase  in  reported  accidents  is  a  natural 
consequence  of  allowing  claims  for  slight  casualties,  which 
formerly  went  unnoticed,  and  for  injuries  within  a  statu- 
tory meaning  of  "accident"  broader  than  the  common  one. 

^^La  France  Judiciaire,  Apr.  3,  1908,  p.  78. 
^"^L'Economiste  Frangais,  Feb.  13,  1909. 
881908,  No.  5,  p.  201. 
8«Frankel  and  Dawson,  121. 


67 

Furthermore,  a  marked  growth  in  industry  increases 
accidents  not  only  positively  but  relatively,  and  seasons 
of  great  prosperity  with  their  inevitable  work  at  high 
pressure  notoriously  raise  the  accident  rate. 

Yet,  after  making  all  allowances,  we  do  find  a  sub- 
stantial increase  in  the  accident  rate  suggestively  coin- 
cident with  the  operation  of  compensation  laws. 

A  thorough  analysis  of  all  the  cases  would,  perhaps, 
show  that  in  most  countries  compensation  laws  have 
a  comparatively  slight  influence  upon  the  number  of  seri- 
ous accidents  (the  marked  decrease  in  the  German  figures 
for  total  incapacity  is  mainly  attributable  to  preventive 
measures),  but  the  analysis  would  show  an  increase  of 
less  serious,  and  especially  of  trifling  hurts,  with  a  con- 
siderable exaggeration  of  effect — to  say  nothing  of 
malingering  and  simulation. 


EFFECT  ON  WORKMEN. 

We  will  assume  that,  taking  the  countries  by  and 
large,  the  bulk  of  compensation  money  is  paid  on  meri- 
torious claims,  but  this  does  not  relieve  us  from  inquiry 
as  to  the  effect  of  the  compensation  laws  upon  workmen 
as  a  whole. 

Whatever  the  relation  of  the  compensation  laws  to 
actual  pauperism  they  develop  the  pauper  spirit  so  far 
as  they  beget  malingering  and  simulation.     We  cannot  Malingering 

.  .       .  and  simula- 

accurately  estimate  the  incidence  of  these  evils.     Much  «on. 
depends  on  the  structure  of  the  particular  law,  more 
on  the  spirit  in  which  the  law  is  administered.     Local 
conditions  and  racial  characteristics  have  some  weight. 

In  the  testimony  taken  by  a  British  Departmental 
Committee  in  1904  we  find  a  substantial  amount  of 
malingering  alleged  but,  seemingly,  not  enough  seriously 
to  discredit  the  law.  It  is  said  that  malingering  has  in- 
creased under  the  act  of  1906  because  this  reduces  the 


68 

disability  period  from  two  weeks  to  one,  and,  if  disability 
lasts  two  weeks,  allows  compensation  from  the  date  of 
accident.^^ 

A  report  of  a  special  commission  of  1905  accompany- 
ing proposed  amendments  to  the  Italian  compensation 
law  asserts  that  workmen  frequently,  not  to  say  generally, 
display  a  tendency  to  exaggerate  and  prolong  the  effect 
of  accident,  "And  futhermore  simulation  is  not  infre- 
"quent  especially  lumbago,  muscular  distentions  and 
"nervous  affections.  In  certain  centres,  Kome  for  exam- 
"ple,  simulation  has  reached  such  degree  of  frequency  and 
"perfection  that  eminent  medical  experts  and  alienists 
"such  as  Professors  Parisotti  and  Mingazzi  have  gone  so 
"far  as  to  suppose  the  existence  of  an  actual  medical 
"school  of  simulation,  a  supposition  which  suffices  to 
"account  for  the  extremely  clever  doings  of  workmen 
"who,  calling  scientific  ideas  to  their  aid,  know  how  to  give 
"illusions  of  the  gravest  affections  though  they  merely 
"have  slight  injuries. ^^ 

In  France  a  new  word  ^^sinistrose^'  has  been  coined 
to  define  the  fraudulent  practices  developed  by  the  com- 
pensation law,^2  and  the  average  of  time  lost  by  accident 
has  risen  from  17  days  in  1890  to  23  days  in  1907.^^ 

The  German  system  with  its  workmen's  contributions 
for  accidents  of  less  than  three  months'  disablement  and 
its  administration  by  associated  employers  should  and 
probably  does  lessen  opportunity  for  fraud,  yet  fraud  is 
by  no  means  unknown.^* 

If  simulation  and  malingering  are  nowhere  serious 
enough  to  discredit  the  compensation  laws  they  are 
everywhere  serious  enough  to  cause  solicitude,  and  the 
slighter  the  disabilities  covered  by  a  law  the  more  are 
these  practices  encouraged. 

®^Jour.  of  Insurance  Institute  of  London,  1909-10,  p.  59. 
^'^Bulletin  des  Assurances  Sociales,  1908,  No.  1,  p.  193. 
^^La  France  Judiciaire,  Mar,  12,  1910,  p.  35. 
'^^VIII  Congres  des  Assurances  Sociales,  790. 
^*VIII  Congres  des  Assurances  Sociales,  138. 


69 

The  relation  of  a  compensation  law  to  unemployment  unempioy- 
is  attracting  attention  in  Great  Britain. 

The  Poor  Law  Commission  finds  that  the  number  of 
the  unemployed  and  of  the  "casuals"  is  somewhat  in- 
creased by  the  Compensation  Act  which  tends  to  discour- 
age the  employment  of  elderly  men  who  are,  supposedly, 
peculiarly  liable  to  meet  with  accident.®^  The  minority 
dissent  from  that  conclusion.^^ 

Whether  or  not  the  Act  materially  shortens  the  age 
limit  its  interpretation  by  the  courts  tends  to  discourage 
the  employment  of  men  falling  below  a  certain  physical 
standard. 

Clover,  Clayton  &  Co.  v.  Hughes  is  the  most  significant 
of  several  decisions  allowing  compensation  for  a  happen- 
ing which  w  ould  have  done  little  or  no  damage  to  a  man  in 
ordinary  health — a  workman  suffering  from  an  aneurism 
dropped  dead  from  a  slight  exertion.  The  House  of 
Lords,  two  judges  dissenting,  pronounced  the  death  an 
"accident"  within  the  meaning  of  the  Act.^^ 

In  view  of  such  decisions  there  seems  to  be  forming 
among  workmen  what,  from  the  insurance  standpoint,  is 
a  class  of  "bad  risks"  whose  opportunity  for  work  must 
be  somewhat  curtailed  since  insurance  companies  are  tak- 
ing notice  of  the  conditions. 

A  recent  Scotch  case  is  of  interest  in  this  relation. 
A  workman  somewhat  weakened  by  an  accident  sued  the 
Iron  Trade  Employers'  Insurance  Association  alleging 
that  he  was  unable  to  follow  his  trade  because  owing  to 
his  condition  he  had  been  blacklisted  by  the  Association. 
The  court  held  that  the  Association  acted  within  its 
rights  as  an  insurance  organization  in  warning  its  mem- 

»5Report,  1909,  pp.  220,  363.  See  also  C.  S.  Loch,  Charity  and 
Social  Life,  357. 

^•'Ileport,  p.  1167.  That  liability  to  accident  increases  with  age 
is  shown  by  the  figures  for  the  German  Employers'  Associations 
giving  the  number  of  accidents  per  1,000  insured:  18-20,  3.6; 
20-30,  5.4;  30-40,  9.2;  40-50,  12.3;  50-60,  13.8.  Frankel  and  Daw- 
son,   103. 

»U910,  A.  C,  242. 


70 

bers  against  applicants  for  work  wlio  were  not  up  to  the 
physical  standard.®^ 

Mutual  aid.  Some  of  the  British  unions  have  long  given  sickness 

and  death  benefits,  covering  accidents,  but  this  induce- 
ment to  join  is  so  slight  in  comparison  with  trade  com- 
pulsion that  free  compensation  under  the  law  has  not 
drawn  away  members.  An  injured  member  gets  both 
compensation  and  benefit  and  it  seems  that  this  duplica- 
tion, sometimes  equalling  the  victim's  wages,  tends  to  en- 
courage malingering.  Many  unions  take  a  direct  interest 
in  the  operation  of  the  Act  by  pressing  claims  for  their 
members. 

From  the  trade  union  wherein  accident  benefits  are 
of  minor  importance  we  pass  to  the  benevolent  or  friendly 
society  wherein  sickness  and  death  benefits,  covering  ac- 
cidents, are  the  notable  inducement  to  membership. 

Friendly  societies  are  of  broader  purpose  than  trade 
unions,  being  designed  to  promote  fraternity  and  thrift 
rather  than  a  distinctive  industrial  interest. 

A  compulsory  accident  law  should  not,  by  itself,  impair 
the  usefulness  of  friendly  societies,  but  if  sickness,  acci- 
dent, invalidity,  old  age,  unemployment,  etc.,  etc.,  are 
brought  within  compulsory  relief  voluntary  associations 
covering  their  ground  must  sooner  or  later  give  way  un- 
less indeed  they  be  effectively  dovetailed  into  the  adminis- 
tration of  the  new  system,  as  for  instance  in  Germany, 
where  the  old  friendly  societies  have,  as  we  have  seen,  been 
largely  utilized  for  the  sick  insurance  system. 

Some  of  the  British  societies  seem  apprehensive  of 
their  fate  if  broad  social  insurance  projects  shall  be  exe- 
cuted, but  Mr.  Winston  Churchill  intimates  that  trade 
unions  and  friendly  societies  conducted  on  sound  lines 
"will  be  regarded  by  the  state  as  among  its  most  valuable 

»8Mackenzie  v.  Iron  Trades  Emp.  Ass'n,  1909,  1  Scots  L.  T.,  505. 


71 

instruments  for  securing  the  good  administration  of  its 
insurance  schemes."^^ 

There  are  thoughful  publicists  who  apprehend  the 
impairment  of  solid  voluntary  associations  by  the  com- 
petition of  public  relief  or  by  the  proffer  of  public  sub- 
ventions. 

The  venerable  Frederic  Passy  says  in  a  preface  to  La  f.  Pas»y. 
Mutualite  by  M.  F.  L6pine :  "Thrift  is,  as  you  say,  a  vir- 
"tue ;  and  virtue  is  not  ordained.  It  is  voluntary  or  it  is 
"non-existent.  Thrift  is,  as  you  assert  and  prove,  a  busi- 
"ness.  And  a  business  is  not  built  upon  desires  and  am- 
"bitions;  it  reasons  and  calculates.  Mutuality,  as  you 
"say,  finally,  which  subsists  not  to  do  away  with  sickness, 
"old  age  or  death,  but  to  soften  the  blows  by  distributing 
"them,  to  reduce,  following  an  expression  I  think  I  intro- 
"duced  in  tlie  language  of  insurance,  the  individual 
"catastrophes  that  destroy,  into  a  dust  cloud  of  acci- 
"dents  that  distributes  itself.  Mutuality  should  be  self- 
"sufficient,  and  to  produce  all  its  good  effects,  in  re- 
"maining  truly  fraternal,  should  borrow  nothing  from  the 
"deceptive  favors  of  the  state  and  should  cause  the  charge 
"of  the  sacrifice  it  involves  to  fall  only  upon  those  who 
"profit  by  it."  And  M.  Lupine  says  in  his  book :  "Mutu- 
"alism,  instead  of  patterning  itself  more  and  more  after 
"socialism,  its  enemy  brother,  by  appealing  for  an  ever- 
"increasing  aid  from  the  state,  that  is  to  say,  by  employing 
"constraint  and  spoliation,  will  finally  show  itself,  as  it 
"is  and  should  be,  radically  opposed  to  socialism  since  it 
"is  founded  wholly  upon  personal  vigor  and  willing  associ- 
"ation,  upon  justice  and  liberty."^^^ 

These  views  of  Frenchmen  have  a  peculiar  signficance, 
for  France  is  the  home  of  thrift — the  seat  of  petty  capi- 
talists whose  vast  accumulations  so  dramatically  un- 
covered years  ago  for  the  redemption  of  the  land  from  the 

»»London  Times,  June  21,  1909.    See  Mr.  Lloyd  George,  Times, 
Nov.  3,  1910. 
loop.  217. 


72 

German  occupation,  are  to-day  so  potent  in  tlie  world's 
money  market. 

GENERAL  RESULTS. 

In  no  country  where  a  compensation  law  is  the  only  or 
the  main  type  of  social  insurance  does  it  seem  to  have 
markedly  affected  general  conditions  one  way  or  the 
other,  but  we  may  safely  assume  that  except  as  its  work- 
ing may  be  marred  by  malingering,  unemployment  and 
the  improvident  use  of  lump  sums,  where  these  are  given, 
its  effect  is  beneficial. 

Even  in  the  comparatively  long  experience  of  Ger- 
many with  this  and  other  insurances  it  is  impossible  to 
estimate  their  precise  relation  to  the  industrial  progress 
of  the  nation,  though  we  may  accept  the  following  com- 
ment by  a  foreign  observer :  "No  one  can  doubt  that  the 
general  w^ell-being  of  the  working  classes  in  Germany, 
which  is  strikingly  visible  to  the  eye  and  confirmed  by 
vital  statistics  in  spite  of  many  unfavorable  circum- 
stances, is  in  a  large  measure  due  to  the  insurance  sys- 
tem."i<^i 

In  most  civilized  states  workmen's  compensation  has 
become  a  permanent  factor  in  industry,  and  at  present 
there  is  no  disposition  to  shift  the  direct  payment  from 
the  employer  to  the  community,  which,  however,  ulti- 
mately pays  the  greater  part  of  the  cost  in  purchasing 
the  products. 

Hundreds  of  millions  of  dollars  have  been  distributed 
among  millions  of  injured  workmen  and  their  dependents 
since  the  enactment  of  the  first  compensation  law  by 
Germany  in  1884,  and  it  is  safe  to  say  that,  so  far  from 
the  distribution  becoming  restricted  in  a  country  where 
it  has  once  begun,  any  change  will  be  in  the  way  of  en- 
largement. 

At  first  blush  it  might  seem  that  the  direct  alleviation 

101  Arthur  Shadwell,  Industrial  Efficiency,  p.  403. 


73 

of  misfortune  indicated  by  the  grand  totals  demonstrates 
the  wisdom  of  the  laws,  but,  in  truth,  proof  of  this  sort 
would  justify  any  compulsory  transfer  of  money  from 
those  who  have  to  those  who  lack. 

If  these  compensation  laws  are  to  be  widely  and  per- 
manently useful  they  must  be  conceived  and  executed  on 
the  line  of  sound  economy,  not  of  almsgiving — they  must 
find  their  justification  in  a  general  improvement  of  in- 
dustrial conditions  and  not  solely  in  meeting  the  needs 
of  their  beneficiaries.  The  law  framed  for  the  disabled 
fraction  of  the  working  body  must  tend  to  raise  the  stand- 
ard of  life  for  the  active  majority — a  movement  wherein 
increased  efficiency  must  accompany  an  increase  in  well- 
being  that  shall  be  real  and  stable. 

If  the  precise  effect  of  the  foreign  laws  is  not  clear  in 
all  respects,  they  at  least  demonstrate  that  systematic 
compensation  for  industrial  accidents  is  practicable  on  a 
large  scale. 

III. 

COMPULSORY   COMPENSATION   IN   THE 
UNITED  STATES. 

RECENT  LAWS. 

Three  States  have  lately  enacted  compulsory  com- 
pensation laws  of  which  we  note  some  important 
features. 

A  New  York  law  of  June  25,  1910,  entitled  "An  Act  n.  y.  Law 

of  1910. 

to  amend  the  labor  law,  in  relation  to  workmen's  com- 
pensation in  certain  dangerous  employments,^'  provides 
(Article  14a)  i^^^^ 

"§  215.  This  article  shall  apply  only  to  workmen 
"engaged  in  manual  or  mechanical  labor  in  the  following 

ioi«See  pp.  88,  101,  106,  119,  123,  124,  130. 


74 

"employments,  each  of  which  is  hereby  determined  to  be 
"especially  dangerous,  in  which  from  the  nature,  condi- 
"tions  or  means  of  prosecution  of  the  work  therein,  ex- 
"traordinary  risks  to  the  life  and  limb  of  workmen  en- 
"gaged  therein  are  inherent,  necessary  or  substantially 
"unavoidable,  and  as  to  each  of  which  employments  it  is 
"deemed  necessary  to  establish  a  new  system  of  com- 
"pensation  for  accidents  to  workmen. 

"1.  The  erection  or  demolition  of  any  bridge  or  build- 
"ing  in  which  there  is,  or  in  which  the  plans  and  specifi- 
"cations  require,  iron  or  steel  frame  work. 

"2.  The  operation  of  elevators,  elevating  machines 
"or  derricks  or  hoisting  apparatus  used  within  or  on  the 
"outside  of  any  bridge  or  building  for  the  conveying  of 
"materials  in  connection  with  the  erection  or  demolition 
"of  such  bridge  or  building. 

"3.  Work  on  scaffolds  of  any  kind  elevated  twenty 
"feet  or  more  above  the  ground,  water,  or  floor  beneath 
"in  the  erection,  construction,  painting,  alteration  or 
"repair  of  buildings,  bridges  or  structures. 

"4.  Construction,  operation,  alteration  or  repair  of 
"wires,  cables,  switchboards  or  apparatus  charged  with 
"electric  currents. 

"5.  All  work  necessitating  dangerous  proximity  to 
"gunpowder,  blasting  powder,  dynamite  or  any  other 
"explosives,  where  the  same  are  used  as  instrumentalities 
"of  the  industry. 

"6.  The  operation  on  steam  railroads  of  locomotives, 
"engines,  trains,  motors  or  cars  propelled  by  gravity  or 
"steam,  electricity  or  other  mechanical  power,  or  the 
"construction  or  repair  of  steam  railroad  tracks  and  road 
"beds  over  which  such  locomotives,  engines,  trains, 
"motors  or  cars  are  operated. 

"7.  The  construction  of  tunnels  and  subways. 

"8.  All  work  carried  on  under  compressed  air. 


T5 

"§  217.  If,  in  the  course  of  any  of  the  employments 
^*above  described,  personal  injury  by  accident  arising  out 
"of  and  in  the  course  of  the  employment  after  this  article 
"takes  effect  is  caused  to  any  workman  employed  therein, 
"in  whole  or  in  part,  or  the  damage  or  injury  caused 
"thereby  is  in  whole  or  part  contributed  to  by 

"(a)  A  necessary  risk  or  danger  of  the  employment 
"or  one  inherent  in  the  nature  thereof ;  or 

"(b)  Failure  of  the  employer  of  such  workman  or 
"any  of  his  or  its  officers,  agents  or  employees  to  exercise 
"due  care,  or  to  comply  with  any  law  affecting  such  em- 
"ployment;  then  such  employer  shall,  subject  as  herein- 
"after  mentioned,  be  liable  to  pay  compensation  at  the 
"rates  set  out  in  section  two  hundred  and  nineteen-a  of 
"this  title ;  provided  that  the  employer  shall  not  be  liable 
"in  respect  of  any  injury  which  does  not  disable  the  work- 
"man  for  a  period  of  at  least  two  weeks  from  earning  full 
"wages  at  the  work  at  which  he  was  employed,  and  pro- 
"vided  that  the  employer  shall  not  be  liable  in  respect  of 
"any  injury  to  the  workman  which  is  caused  in  whole  or 
"in  part  by  the  serious  and  willful  misconduct  of  the 
"workman." 

"§  219-a.  The  amount  of  compensation  shall  be  in  case 
"death  results  from  injury: 

"(a)  If  the  workman  leaves  a  widow  or  next  of  kin 
"at  the  time  of  his  death  wholly  dependent  on  his  earn- 
"ings,  a  sum  equal  to  twelve  hundred  times  the  daily 
"earnings  of  such  workman  at  the  rate  at  which  he  was 
"being  paid  by  such  employer  at  the  time  of  the  injury 
"subject  as  hereinafter  provided,  and  in  no  event  more 
"than  three  thousand  dollars.  Any  weekly  payments 
"made  under  this  article  shall  be  deducted  in  ascertaining 
"such  amount. 

"(b)  If  such  widow  or  next  of  kin  at  the  time  of  his 
"death  are  in  part  only  dependent  upon  his  earnings, 


76 

"such  proportionate  sum  not  exceeding  that  provided  in 
"sub-division  a  as  may  be  determined  according  to  the 
"injury  to  such  dependents. 

"(c)  If  he  leaves  no  dependents,  the  reasonable  ex- 
"penses  of  his  medical  attendance  and  burial,  not  ex- 
"ceeding  one  hundred  dollars. 

"Whatever  sum  may  be  determined  to  be  payable 
"under  this  article  in  case  of  death  of  the  injured  work- 
"man  shall  be  paid  to  his  legal  representative  for  the 
"benefit  of  such  dependents,  or  if  he  leaves  no  such  de- 
"pendents,  for  the  benefit  of  the  persons  to  whom  the  ex- 
"penses  of  medical  attendance  and  burial  are  due. 

"2.  Where  total  or  partial  incapacity  for  work  at  any 
'^gainful  employment  results  to  the  workman  from  the 
"injury,  a  weekly  payment  commencing  at  the  end  of  the 
"second  week  after  the  injury  and  continuing  during  such 
"incapacity,  subject  as  herein  provided,  equal  to  fifty 
"per  centum  of  his  average  weekly  earnings  when  at  work 
"on  full  time  during  the  preceding  year  during  which  he 
"shall  have  been  in  the  employment  of  the  said  employer, 
"or  if  he  shall  have  been  in  the  employment  of  the  same 
"employer  for  less  than  a  year,  then  a  weekly  payment 
"of  not  exceeding  three  times  the  average  daily  earnings 
"on  full  time  for  such  less  period.  In  fixing  the  amount 
"of  the  weekly  payment,  regard  shall  be  had  to  the  differ- 
"ence  between  the  amount  of  the  average  earnings  of  the 
"workman  before  the  accident  and  the  average  amount  he 
"is  able  to  earn  thereafter  as  wages  in  the  same  employ- 
"ment  or  otherwise.  In  fixing  the  amount  of  the  weekly 
"payment,  regard  shall  be  had  to  any  payment,  allowance 
"or  benefit  which  the  workman  may  have  received  from 
"the  employer  during  the  period  of  his  incapacity,  and  in 
"the  case  of  partial  incapacity  the  weekly  payment  shall 
"in  no  case  exceed  the  difference  between  the  amount  of 
^*the  average  weekly  earnings  of  the  workman  before  the 
"accident  and  the  average  weekly  amount  which  he  is 


77 

"earning  or  is  able  to  earn  in  the  same  employment  or 
"otherwise  after  the  accident,  but  shall  amount  to  one- 
"half  of  such  difference.  In  no  event  shall  any  compensa- 
"tion  paid  under  this  article  exceed  the  damage  suffered, 
"nor  shall  any  weekly  payment  payable  under  this  article 
"in  any  event  exceed  ten  dollars  a  week  or  extend  over 
"more  than  eight  years  from  the  date  of  the  accident." 

The  act  further  provides  inter  alia  that  no  existing 
rights  of  action  shall  be  affected  thereby,  but  that  one 
who  brings  an  action  shall  forfeit  claim  to  compensation, 
also  that  "any  question  which  may  arise  under  this  act 
shall  be  determined  either  by  agreement  or  by  arbitration 
as  provided  in  the  Code  of  Civil  Procedure  or  by  an 
action  at  law  as  herein  provided''  which  action  "shall  be 
conducted  in  the  same  manner  as  actions  at  law  for  the 
recovery  of  damages  for  negligence." 

An  Act  creating  a  State  Accident  Insurance  and  Total  Montana  Law 

®  of  1910. 

Permanent  Disability  Fund  for  Coal  Miners^^^  provides 
that  "all  workmen,  laborers  and  employees  employed  in 
"and  around  any  coal  mines  or  in  and  around  any  coal 
"washers  in  which  coal  is  treated,  except  office  employees, 
"superintendents  and  general  managers,  shall  be  insured 
"in  accordance  with  the  provisions  of  this  Act,  against 
"accidents  occurring  in  the  course  of  their  occupation." 

The  operators  shall  pay  to  the  auditor  of  the  State 
within  five  days  after  the  monthly  payment  of  wages  one 
cent  per  ton  on  the  tonnage  of  coal  mined  and  shipped  or 
ready  for  shipment,  and  operatives  shall  submit  to  a  de- 
duction of  one  per  cent,  of  their  gross  monthly  earnings: 
which  shall  be  paid  by  the  operators  to  the  State  Auditor 
within  five  days  after  the  payment  of  monthly  wages. 

The  amount  so  paid  to  the  auditor  is  called  a  "tax." 
The  auditor  shall  pay  the  moneys  to  the  State  Treasurer 
who  shall  place  them  in  a  distinct  fund  called  the  Em- 

lo^Laws  of  Montana,  1909,  c.  67.    See  infra,  pp.  108,  119,  122, 130. 


78 

ployers  and  Employees  Co-operative  Insurance  and  Total 
Permanent  Disability  Fund. 

The  auditor  "upon  being  satisfied  by  adequate  evi- 
"dence  of  accidental  death"  shall  issue  a  warrant  upon 
the  treasurer  to  the  dependants  of  the  deceased  in  the 
sum  of  $3,000. 

A  workman  receiving  permanent  injury  shall  receive  a 
monthly  compensation  of  not  more  than  $1.00  a  day  for 
each  working  day.  Loss  of  a  limb  or  an  eye  shall  be  com- 
pensated for  in  the  sum  of  $1,000.  "If  there  are  no  funds 
"available  to  pay  the  auditor's  warrant  this  shall  draw 
"interest  at  the  rate  of  10  per  cent,  per  annum  until  such 
"warrant  is  called  for  payment  by  the  treasurer  which 
"shall  be  as  soon  as  the  fund  is  sufficient  to  pay  the  same 
"with  its  interest  then  due."  When  any  monthly  payment 
has  been  made  the  beneficiary  may  claim  a  lump  sum  not 
in  excess  of  $3,000  from  which  any  payments  already 
made  shall  be  deducted. 

The  auditor  "shall  have  plenary  power  to  determine 
"all  disputed  cases  which  may  arise  in  his  administration 
"not  herein  provided  for  and  to  recommend  in  his  report 
"the  rates  or  premiums  necessary  to  preserve  such  fund 
"and  shall  order  paid  such  indemnifications  as  herein 
"provided.  He  shall  have  power  to  define  the  insurance 
"provisions  of  this  Act  by  regulations  not  inconsistent 
"therewith  and  shall  prescribe  the  character  of  the 
"monthly  or  other  reports  required  of  the  parties  liable 
"hereunder  and  the  character  of  the  proofs  of  deaths,  or 
"total  permanent  disability,  and  shall  have  power  to  make 
"all  other  orders  and  rules  necessary  to  carry  out  the 
"true  intent  of  this  Act." 

Acceptance  of  benefits  shall  relieve  the  employers 
from  liability  to  suit  and  the  commencement  of  a  suit 
shall  operate  as  a  forfeiture  of  the  right  to  benefits. 

Maryland  The  preamble  to  a  Maryland^^^  statute  reads  as  fol- 

JLaw  of  1910. 

lows:   "An  Act  to  create  a  fund  for  the  relief  and  suste- 
1031910,  c.  153.    See  infra,  pp.  108,  119,  130. 


79 

"nance  of  employees  injured  in  coal  and  clay  mining  in 
"Allegany  and  Garrett  Counties,  and  the  dependents  of 
"employees  injured  or  killed  in  such  mining,  and  provid- 
"ing  for  the  imposition  of  a  tax  of  twenty-seven  cents  per 
"month,  for  such  employee,  upon  all  employers  engaged 
"in  the  business  of  coal  and  clay  mining,  in  said  counties, 
"and  for  a  like  tax  upon  each  employee  to  be  deducted 
"from  his  monthly  wages,  by  the  employer,  both  taxes 
"to  be  paid  monthly,  and  a  report  made  thereon,  to  the 
"Treasurers  of  said  counties  by  such  employers,  the  same 
"to  be  kept  by  the  Treasurers  in  distinct  funds  to  be 
"known  as  ^Miners  and  Operators  Co-operative  Relief 
"Fund,'  providing  for  certain  payments  therefrom 
"under  the  orders  of  the  County  Commissioners,  as  re- 
"lief  money,  to  persons  injured  and  disabled  while  in  the 
"discharge  of  their  duties  in  or  about  such  mines,  and 
"for  the  payment  of  relief  money  to  the  extent  of  fifteen 
"hundred  dollars,  under  orders  of  the  County  Commis- 
"sioners,  to  the  personal  representative  of  such  employee 
"who  may  meet  death  in  the  discharge  of  his  duties,  for 
"the  relief  and  sustenance  of  the  indigent  dependents  of 
"such  employee;  defining  the  administrative  powers  and 
"duties  of  such  Commissioners  in  relation  to  such  relief 
"fund,  and  their  right  to  enforce  the  payment  of  the  tax, 
"providing  for  advancements  by  the  Treasurer  of  one 
"county  to  the  Treasurer  of  the  other  to  cover  temporary 
"depletions  of  such  county  fund,  and  for  the  remission 
"of  the  tax  when  such  fund  reaches  fifty  thousand  dol- 
"lars;  ♦  ♦  ♦  exempting  parties  complying  with  this 
"Act  from  suits  for  injuries,  disability  and  death  sus- 
"tained  by  their  employees,  when  relief  has  been  accepted 
"or  sued  for  under  this  Act;     *     *     * 

"Whereas,  it  is  the  duty  of  the  Government  to  pro- 
"vide  sustenance  in  the  case  of  helpless  indigence  to  those 
"who  are  or  may  become  paupers  and  charges  upon  the 
"public  and  is  the  settled  practice  of  Governments  to  do 
"so;  and 


80 

"Whereas,  experience  has  shown  that  the  occupation 
"of  coal  and  clay  mining  in  Allegany  and  Garrett 
"Counties  is  attended  with  peril  peculiar  to  the  occupa- 
"tion  itself,  and  that  a  great  number  of  employees  in  the 
"mines,  without  estates  and  having  large  families  and 
"dependents  are  annually  disabled  or  killed  in  conse- 
"quence  of  injuries  sustained  in  their  employment  and 
"they  and  their  families  become  objects  of  charity  and 
"charges  upon  the  public  authorities,  and  their  infant 
"children  are  unable  to  secure  the  proper  support  and 
"education;  and 

"Whereas,  it  appears  that  such  injuries,  disabilities 
"and  death  occur  with  such  regularity  as  to  be  susceptible 
"of  approximation  in  advance  and  are  inherent  in  the  occu- 
"pation  and  a  part  of  the  business  itself  and  the  monetary 
"loss  therefrom  ought  to  be  charged  up  to  the  occupation 
"and  business;  and 

"Whereas,  sound  policy  requires  that  some  provision 
"be  made  for  the  sustenance  of  the  family  and  dependents 
"of  such  injured  or  disabled  employee  and  the  widows 
"and  infant  children  and  dependents  of  such  employee 
"when  death  results  from  such  injuries,  therefore,"  etc. 

The  County  Treasurer  shall  make  payments  when 
directed  by  the  County  Commissioners;  specific  amounts 
are  paid  for  specific  injuries,  e  g.,  loss  of  hands  or 
blindness  |750;  there  is  paid  in  addition  a  dollar  a  day 
during  medical  treatment  of  not  more  than  twenty-six 
weeks;  for  total  disability  other  than  specified,  one  dol- 
lar a  day  for  not  more  than  fifty-two  weeks;  in  case  of 
death  within  a  year  payment  of  |1,500,  less  what  may 
have  been  paid  as  above.  Commissioners  shall  determine 
what  dependents  are  entitled,  how  much  they  shall  re- 
ceive, and  whether  in  lump  sums  or  allowances,  and  they 
may  invest  $750  in  home  for  widow  and  infants.  The 
bringing  of  suit  for  damages  forfeits  rights  under 
the  Act. 


81 

The  above  acts  will  be  referred  to  here  and  there,  but 
the  purpose  of  this  general  brief  will  not  permit  a  full  and 
separate  consideration  of  all  the  important  questions 
which  they  suggest;  and  they  are  cited  here  as  an  intro- 
duction to  a  broad  discussion  of  the  legal  aspects  of  com- 
pulsory compensation  in  the  United  States. 


FUNCTION  AND  POWERS  OF  GOVERNMENT. 

We  have  seen  that  European  governments  may  engage 
in  any  scheme  of  "social  insurance" — accident,  old  age, 
sickness,  infirmity,  unemployment,  maternity — either  as 
sole  or  part  contributor  or  as  guarantor. 

Having  differentiated,  in  point  of  law,  social  insur- 
ances from  pauper  relief, ^^*  we  perceive  that  the  former 
are  not  within  the  powers  of  a  State  of  the  Union  as  these 
have  hitherto  been  employed. 

But  whether  a  State  may  levy  taxes  for  social  insur-  state 
ances  in  general  suggests  broad  constitutional  questions 
we  need  not  discuss,  for  there  is  a  specific  objection  to  its 
financing  of  the  workmen's  compensation  schemes  in  con- 
templation. 

These  are  distinctively  class  legislation,  and  whatever 
discrimination  our  rule  of  "the  equal  protection  of  the 
laws"^^^  may  permit  in  imposing  liability  upon  selected 
employers,  I  am  of  the  opinion  that  a  State  cannot  levy 
taxes  for  the  exclusive  benefit  of  "workmen"  as  such, 
much  less  for  workmen  in  selected  employments. 

And  if  it  be  worth  while  to  speculate  as  to  the  taxing 
powers  of  the  Federal  Government  in  this  relation  I 
should  deem  it  quite  as  incompetent  as  the  States. 

In  short,  waiving  consideration  of  social  insurances 
generally  and  fixing  our  attention  upon  workmen's  com- 
pensation, we  conclude  that  the  state  cannot  in  this 
country  assume  financial  responsibility,  but  that  if  com- 

lo^See  p.  57. 
lo^See  p.  112. 


pensation  can  be  lawfully  imposed,  it  must  of  necessity  be 
the  private  burden,  which  in  other  countries  it  generally 
is  by  choice. 

state  While  an  American  government  is  not  competent  to 

regua  an.  fij^ance  a  workmeu's  compensation  scheme  it  may  regu- 
late whatever  scheme  may  be  devised,  and  the  established 
powers  of  the  Federal  Government  and  of  the  States  to 
regulate  the  insurance  business  within  their  respective 
territories  point  to  an  ample  jurisdiction. 

TAXATION  OE  POLICE  POWER? 

If  a  legislature  shall  pass  a  workman's  compensation 
act  shall  the  imposition  of  private  contributions  be  re- 
ferred to  the  taxing  power  or  to  the  police  power? 

A  compensation  scheme  contemplates  what,  in  an  eco- 
nomic sense,  is,  in  effect,  a  tax  on  the  industries  included. 
If,  also,  the  necessary  contributions  are  taxes  in  a  legal 
sense  (they  are  called  "taxes''  in  the  Montana  and  the 
Maryland  Acts)^^^  they  would  seem  to  lack  the  essential 
justification  of  being  strictly  of  public  purpose.  Further- 
more, a  scheme  singling  out  certain  industries  might  well 
offend  against  the  federal  requirement  of  "the  equal  pro- 
tection of  the  laws." 

But  the  taxing  power  is  not  involved  here.  The 
purpose  of  compensation  laws  is  such  that  if  there  be 
authority  to  exact  the  necessary  contributions  it  must 
be  derived  from  the  police  power. 

LEGISLATIVE  JURISDICTION. 

In  this  federated  nation  of  ours  it  is  of  first  impor- 
tance to  delimit  federal  and  state  jurisdictions  over  our 
subject,  and  turning  to  other  federations  we  observe  that 
in  Germany  the  Empire  assumes  entire  control  of  the 

loeSee  p.  77,  79. 


83 

accident  insurance  system;  and  the  system  under  con- 
sideration in  Switzerland  provides  for  federal  control. 

In  the  Dominion  of  Canada  and  the  Commonwealth 
of  Australia  whatever  has  been  done  in  the  way  of  work- 
men's compensation  has  been  done  by  the  provincial  and 
the  state  legislatures. 

The  United  States  and  the  States  have,  respectively,  interstate 
exclusive  jurisdiction  over  the  subject  so  far  as  it  apper-  fcSSh^miL 
tains  to  their  territorial  domain,  and  if  Congress  has  in 
addition  a  special  jurisdiction  commensurate  with  its 
power  to  regulate  interstate  commence  the  States  may, 
nevertheless,  cover  the  ground  until  Congress  shall  act. 
Has  Congress  jurisdiction? 

The  Sabath  Bill,^^^  introduced  in  the  House  of  Rep- 
resentatives, prescribes  compensation  for  employees  en- 
gaged in  interstate  commerce  and  in  handling  the  mails, 
and  it  defines  these  employments  with  such  exaggeration 
as  to  suggest  even  graver  invasions  of  state  jurisdiction 
than  were  found  by  the  Supreme  Court  in  the  Employers' 
Liability  Act  of  1906. 

Considering  the  principle  of  the  Bill,  I  am  of  the 
opinion  that  affirmance  of  the  Liability  Act  of  1908  would 
not  predetermine  the  validity  of  the  principle.  It  is  one 
thing  for  Congress  to  confer  certain  rights  of  action.  It 
seems  quite  another  to  segregate  a  particular  class  of  the 
community  for  a  great  social  programme  wherein  acci- 
dent compensation  may  be  only  the  initial  step.  If,  how- 
ever, the  one  is  really  linked  with  the  other,  the  Supreme 
Court  should  find  in  this  logical  sequence  of  the  Liability 
Act  a  convincing  proof  of  its  unconstitutionality. 

Even  if  compensation  laws  tended  to  make  operations 
safer  (increased  safety  of  transportation  was  given  by 
Mr.  Justice  Moody  as  a  reason  for  the  Liability  Act, 
207  U.  S.,  533),  they  would  still  lack  the  pertinence  of  a 

lo-^See  pp.  120,  122,  123. 


84 

Safety  Appliance  Act,  but  in  view  of  European  experi- 
ence it  must  be  deemed  matter  of  common  knowledge  that 
these  laws,  to  say  nothing  of  the  less  searching  liability 
statutes,  do  not  reduce  the  accident  rate.  In  fact  the 
rate  has  increased  in  spite  of  them.^^^ 

All  things  considered  a  compensation  law  is  in  my 
opinion  unnecessary,  inappropriate  and,  indeed,  irrele- 
vant to  an  effectuation  of  federal  power  over  commerce 
and  the  mails.  It  deals  with  social  relations  which  are 
the  peculiar  province  of  the  States  and  policy  no  less  than 
law  condemns  federal  intrusion.  Relief  of  destitution 
which  is,  as  we  have  seen,  the  real  end  of  the  law  is  not 
a  normal  federal  function. 

The  "New  Nationalism"  would  add  a  new  mischief  to 
its  list  if  in  each  State  Congress  might  segregate  for 
special  social  benefits,  and,  if  for  benefits  for  burdens, 
that  fraction  of  the  community  who  happen  to  be  em- 
ployed in  interstate  commerce  and  the  mails. 

Objections  to  The    practical    objections    to    a    federal    employers' 

legislation.  liability  law  are  increased  in  the  case  of  a  workmen's 
compensation  system,  which  should  involve  a  single 
authority  over  employers  and  employees  and  a  single 
classification  of  accidents  and  of  compensation  rates. 
This  unity  is  beyond  the  reach  of  the  Federal  Government, 
which  is  forbidden  to  deal  with  accidents  in  local  under- 
takings. It  is  within  the  reach  of  a  state  government 
which,  as  we  have  seen,  may  deal  with  accidents  in  inter- 
state commerce  in  the  absence  of  federal  regulation. 

The  complexities  and  inconsistencies  of  interstate 
commerce  legislation  warn  us  against  increasing  the  diffi- 
culties of  administering  systematic  compensation  in  the 
States  by  adding  this  disturbing  factor. 

A  federal  law  which  should  sufficiently  segregate  acci- 
dents of  local  from  those  of  interstate  character  would,  in 

losSee  p.  65. 


85 


practice,  encourage  much  litigation  over  the  jurisdictional 
question  and  in  the  last  analysis  it  would  beget  dis- 
crimination between  victims  equally  deserving,  but  sorted 
into  sheep  and  goats  by  wire-drawn  distinctions  between 
local  and  interstate  commerce. 

From  whatever  viewpoint,  it  is  evident  that  any  at- 
tempt to  distinguish  accidents  in  interstate  from  those  in 
local  commerce  must  lead  to  much  confusion  and  injus- 
tice. 

If,  after  all,  Congress  should  succeed  in  confusing  the 
situation  to  the  extent  of  its  power  the  great  bulk  of 
accidents  will  still  remain  within  the  exclusive  jurisdic- 
tion of  the  several  States.  This  means  that  a  system  of 
national  scope  cannot  be  instituted  here.  Instead  of 
covering  our  country  with  a  single  law,  one  national  and 
forty-eight  state  legislatures  may  deal  with  the  subject  or 
not  at  discretion,  and,  conceivably,  may  enact  forty-nine 
varieties  of  law. 

Concluding  that  the  United  States  cannot  and  ought 
not  enact,  under  the  interstate  commerce  power,  a  com- 
pensation law,  but,  like  the  States,  may  act,  if  at  all,  only 
within  their  exclusive  territory,  we  pass  from  the  subject 
of  jurisdiction  to  the  fundamental  question — whether  or 
how  far  an  American  legislature  may  lawfully  apply  to 
employers  the  principle  of  compulsory  compensation. 

IS  THERE  LEGISLATIVE  PRECEDENT  FOR  COMPULSORY 
COMPENSATION? 

Before  considering  the  status  of  a  compulsory  com- 
pensation law  in  this  country  let  us  see  whether  there  is 
any  American  legislation  whose  established  principle 
predicates  or  even  suggests  its  constitutionality. 

The  exaction  of  contributions  from  individuals  with- 
in a  class  and  the  application  of  the  fund  to  insurance 
or  indemnity  purposes  is  almost,  but  not  altogether, 
unknown  in  this  country. 


J^6 

Seamen's  aid.  In  1798  Congress  required  every  sailor  on  an  Amer- 

ican ship  to  contribute  twenty  cents  a  month  for  the  sup- 
port of  marine  hospitals,  and  in  1864  the  sum  was  in- 
creased to  forty  cents,^^^  where  it  remained  until  the  law 
was  repealed  by  the  Act  of  June  26,  1884. 

A  Pennsylvania  statute  of  1803  required  shipmasters 
not  employing  pilots  in  certain  circumstances  to  pay  half 
the  pilotage  fees  to  the  widows  and  orphans  fund  of  the 
pilots'  associations. ^^^ 

Over  and  above  this  legislation  in  the  seamen's  inter- 
est we  have  the  ancient  rule  of  the  maritime  law  entitling 
a  seaman  who  becomes  sick  or  disabled  in  course  of  the 
voyage  to  proper  care  at  the  expense  of  the  vessel,^  ^^ 
which  rule  it  has  been  held  was  not  affected  by  the  Marine 
Hospital  Act.112 

Neither  the  maritime  law  or  the  foregoing  statutes  is 
a  precedent  for  a  workmen's  compensation  act.  Seamen 
are  and  have  ever  been  in  a  class  by  themselves,  and  in 
Keed  v.  Canfield,^^^  Judge  Story  clearly  distinguishes 
the  common  law  regarding  master  and  servant  from  the 
sea  law. 

But  the  ancient  law  of  the  sea  does  not  give  the 
modern  legislature  opportunity  to  deal  with  mariners  at 
pleasure.  Their  constitutional  rights  and  obligations  are 
simply  construed  in  some  respects  with  reference  to  their 
peculiar  status. 


Maryland 
Act  of  1902. 


Excepting  the  Montana,  the  Maryland  and  the  New 
York  laws  already  cited,^^*  I  have  found  but  one  genuine 
workmen's  compensation  act  in  our  statutes,  and  this  was 
not  compulsory.  A  Maryland  statute  of  1902  enlarged  the 
common  law  liability  of  corporations  engaged  in  certain 

io»E.  S.,  4385. 

110 See  Cooley  v.  Wardens,  12  How.,  299. 

i^iiEmerigon,  p.   488. 

"2Holt  V.  Cummings,  102  Pa.,  212. 

i"l   Sumn.,  199. 

"*See  pp.  73-80. 


87 

industries,  and  exempted  from  the  act  corporations  who 
should  deposit  with  the  State  Insurance  Commissioner 
funds  sufficient  to  pay  $1,000  on  account  of  each  fatal 
accident  happening  in  their  establishment.  A  few  em- 
ployers made  deposits,  a  few  death  benefits  were  duly 
paid,  but  the  act  was  declared  invalid.^ ^^ 

Our  survey  of  American  legislation  discloses  no  es- 
tablished precedent  for  the  fundamental  principle  of  a 
compulsory  compensation  law — the  placing  of  the  burden 
upon  the  persons  interested — employers  or  employees,  or 
both.  The  project  is  novel,  but  its  validity  must  be  de- 
termined by  established  standards. 

STATUS    AND    PRINCIPLE    OF     COMPULSORY     COMPENSATION 

LAWS. 

A  compensation  scheme  not  only  expresses  every- 
where a  broad  public  policy,  but  in  Germany  it  origi- 
nates and  operates  within  the  sphere  of  public  law.^^^ 

While  the  public  side  of  a  scheme  is  in  this  country 
quite  as  apparent  in  fact  as  it  is  in  Germany  it  does  not 
here  dominate.  Under  our  system  of  constitutional 
guarantees  an  act  of  the  legislature  which  imposes  bur- 
dens upon  individuals  raises  dominant  questions  in  re- 
spect of  private  rights.  The  German  viewpoint  and  ours  German 
are  antipodal.  The  German  Government  frames  a  social  thSSy' 
programme  assured  of  the  complete  subordination  of 
private  interests.  An  American  legislature  must  square 
its  programme  with  private  rights,  and  we  shall,  by  de- 
termining in  what  category  of  legislative  projects  a  com- 
pulsory law  properly  falls,  discover  what  rights  it  touches 
and  also  what  particular  legislative  power  it  involves. 
Does  it  involve,  exclusively,  a  regulation  of  "dangerous 
trades"?  Is  it  distinctively  an  obligation  imposable 
upon  incorporated  industries  in  virtue  of  the  state's  re- 

"5See  p.  120. 
ii«See  p.  60. 


vs. 
American 


served  power  over  corporate  charters?  Or  is  it  broadly 
and  simply  a  regulation  of  the  contract  between  master 
and  servant? 


Theory  that 
dangerous 
trades  are 
alone  subject 
to  compen- 
sation. 


Believing,  apparently,  that  hazardous  employments 
alone  can  be  constitutionally  subjected  to  a  compensation 
scheme,  but  realizing  the  injustice  of  denying  relief  to 
the  many  workmen  who  are  injured  in  employments  that 
are  not  normally  in  the  "hazardous''  class  the  Minnesota 
Commission  makes  this  naive  proposal :  "That  every  em- 
ployer in  the  State  of  Minnesota  conducting  an  employ- 
ment in  which  there  hereafter  occurs  bodily  injury  to  any 
of  the  employes  arising  out  of,  and  in  the  course  of  such 
employment,  is  for  the  purposes  of  this  Act  hereby  defined 
to  be  conducting  a  dangerous  employment,  and  conse- 
quently subject  to  the  provisions  of  this  Act,  and  entitled 
to  the  benefits  thereof."  On  the  effective  date  of  such  a 
law  a  brakeman  falls  from  a  train  and  railway  operation, 
always  considered  hazardous,  becomes  superfluously  so 
defined;  a  few  days  later  a  kindergarten  teacher  falls 
downstairs  and  the  education  of  children,  never  con- 
sidered hazardous,  becomes  so  during  the  life  of  the  act. 
Thus  all  employments  are,  one  after  another,  dragged 
into  an  arbitrary  and  a  false  list  of  "dangerous  trades." 
Courts  have  gone  far  in  accepting  legislative  assumptions 
of  fact  as  accurate  foundations  for  statutes,  but  in  esti- 
mating "matters  of  common  knowledge"  the  judge  is  not 
concluded  by  the  vagaries  of  the  legislator,  and  no  court 
could  decently  subscribe  to  so  gross  a  perversion  of 
facts.ii«^ 

The  New  York  Commission  also  seems  to  think  that 
compulsory  compensation  can  be  lawfully  prescribed  for 
"dangerous  trades"  alone,  though  it  does  not  define  these 
in  the  absurd  Minnesota  manner.     After  noting  the  power 

iieaThe  absurdity  of  the  Minnesota  proposal  was  thoroughly  ex- 
posed at  the  National  Conference  on  Workmen's  Compensation, 
Chicago,  June  10-11,  1910.     Proceedings,  pp.  44-50,  76. 


8li 

to  prescribe  regulations  for  the  safe  conduct  of  industries, 
it  says :  "We  are  of  opinion  that  it  is  competent  for  the 
"legislature  to  take  a  further  step  and  provide  conditions 
"of  [sic]  the  carrying  on  of  such  dangerous  industries— 
"not,  at  the  moment,  conditions  as  to  the  method  of 
"carrying  them  on,  but  conditions  providing  that  any  man 
"in  the  State  who  carries  on  such  dangerous  trades  shall 
"be  liable  to  make  compensation  to  the  employes  injured 
"either  by  any  fault  of  the  employer  or  by  these  un- 
"avoidable  risks  of  the  employment."  "Though  quite 
"within  its  powers,"  says  the  Commission,  "it  is  almost 
"unthinkable  that  the  legislature  should  prohibit  the  con- 
"struction  of  tunnels  ♦  *  ♦  [or]  the  construction 
"of  bridges  with  iron  or  steel  framework.  *  *  ♦  But 
"we  argue  with  confidence  that  since  the  legislature  has 
"the  power  to  prohibit  such  inherently  dangerous  work 
"and  is  unwilling  to  do  it,  it  may  prescribe  that  any  em- 
"ployer  who  carries  on  such  dangerous  work  shall  pay 
"for  the  loss  of  limbs  and  lives  of  the  workmen  who  are  of 
"necessity  sacrificed  in  it."^^^ 

If  the  premise  that  "the  legislature  has  the  power  to 
prohibit  such  inherently  dangerous  trades"  were  sound 
law,  we  might  perhaps  accept  as  a  plausible  inference  a 
right  to  license  them  under  compensation  conditions. 
But  the  premise  so  coolly  assumed,  is  on  its  face  and  in 
its  implications  an  assault  on  our  body  of  personal  rights. 
Whatever  the  rule  in  Continental  Europe,  American  citi- 
zens engage  in  enterprise  by  right  and  not  by  state  per- 
mission. 

"^Report,  p.  47.  Bertholf  v.  O'Reilly,  74  N.  Y.,  509,  which  the 
Commission  cites  as  "perhaps  the  strongest  authority  for  [their] 
position"  really  exposes  its  weakness.  In  that  case  the  court  sus- 
tained a  statute  making  the  owner  of  premises  knowingly  leased 
for  liquor  traffic  liable  for  damage  done  by  persons  intoxicated  by 
liquor  dispensed  thereon.  Surely  the  Commission  will  not  say  that 
the  lessor  of  premises  for  a  "dangerous  trade"  may  be  made  a 
responsible  party  in  a  workmen's  compensation  law.  Yet  the 
whole  reason  for  this  drastic  statute  is  the  inherent  vice  of  the 
liquor  traffic,  and  this  quality  the  Commission  would,  in  effect, 
wrongfully  attach  to  their  "dangerous  trades." 


90 


Prohibitory 
powers. 


To  this  broad  rule  there  is  an  express  exception,  af- 
fecting the  form  of  enterprise,  in  the  case  of  incorporated 
undertakings.  This  will  be  considered  presently.  Of 
immediate  interest  there  is  an  implied  exception,  affecting 
the  substance  of  enterprise,  in  a  power  to  prohibit  under- 
takings which  lawmakers  and  courts  agree  may  be 
banned.  In  this  category  are,  for  example,  traffic  in 
liquor,^^^  lotteries/ ^^  cigarettes^^o  and  oleomargarine.^^^ 

Because  a  legislature  may  place  a  ban  upon  such 
things  it  does  not  follow  that  it  may  block  railways,  tie 
the  Gloucester  fishing  fleet  to  its  wharves,  or  close  the 
mines — all  because  of  the  accompanying  risks.  On  the  con- 
trary, the  Supreme  Court  has  implicitly  limited  prohibi- 
tion to  enterprises  which  it  could  not,  as  a  matter  of  com- 
mon knowledge,  assert  are  essentially  useful  and  inno- 
cent. Should  the  "mollycoddle,"  so  persistently  shaken 
in  our  faces,  seek  to  sap  our  manhood  by  apron-string 
laws,  we  may  be  sure  the  Supreme  Court  will  not  give  the 
lie  to  history  by  affirming  that  danger  is  essentially  de- 
moralizing. The  most  necessary  of  the  useful  arts  may  be 
regulated,^^-  but  none  may  be  prohibited  merely  because 
of  its  danger. 


Reserved 
power  over 
corporations. 


We  have  remarked  that  corporate  undertakings  are 
an  exception  to  the  general  rule  of  free  enterprise.  An 
American  legislature  is  authorized  to  grant  new  char- 
ters on  its  own  terms  which  would-be  incorporators  may 
take  or  leave.  In  these  circumstances  we  might  concede  its 
legal  right  to  impose  accident  compensation  as  a  condi- 
tion precedent.  This  course,  however,  will  not  commend 
itself  for  new  enterprises  could  not,  with  such  a  handi- 
cap, compete  with  established  concerns. 


iisMugler  V.  Kansas,  123  U.  S.,  623. 
ii^Champion  v.  Ames,  188  U.  S.,  321. 
i20See  Austin  v.  Tennessee,  179  U.  S.,  343. 
i2iPowell  V,  Pa.,  123  U.  S.,  6. 
i22Barbier  v.  Connolly,  113  U.  S.,  27. 


n 

The  critical  question  is  whether  the  legislature  may, 
under  the  reserved  power  to  amend  charters,  impose  the 
burden  upon  such  concerns.  If  so  we  shall  have  to  amend 
our  statement  that  authority  for  a  compensation  law 
must  invariably  be  sought  in  the  police  power.  If  so, 
most  of  the  industries  that  are  being  conspicuously  urged 
for  compulsory  compensation  may  be  immediately  taken 
in  hand  and  any  corporation,  unless,  perchance,  pro- 
tected by  the  peculiar  terms  of  an  ancient  charter,  may 
sooner  or  later  be  gathered  in. 

In  several  States  the  courts  have  upheld,  as  expressing 
reserved  power  statutes  affecting  the  contract  of  employ- 
ment— for  example  a  requirement  that  wages  be  paid 
weekly  or  semi-monthly,  or  in  cash  ;^^^  and  in  Leep  v.  Rail- 
way Co.,^2^  it  was  held  that  a  statute  ordering  the 
payment  of  employees  on  the  date  of  discharge  under 
penalty  of  full  wages  until  paid  was  valid  as  to  the  cor- 
porations and  invalid  as  to  the  other  persons  mentioned. 
A  decision  closer  to  our  subject  affirms  a  statutory  modi- 
fication of  the  fellow  servant  rule  as  being  authorized 
under  reserved  power.^^^ 

If  the  foregoing  decisions  suggest  that  a  compensation 
law  might  be  forced  upon  corporations  but  not  upon  indi- 
viduals or  partnerships  the  suggestion  must  be  rejected 
not  only  as  involving  an  unlawful  discrimination  both 
against  corporate  employers  and  the  employees  in  unin- 
corporated industry,  but  as  attainting  the  police  power 
which,  if  the  principle  of  compulsory  compensation  be 
valid,  is  broad  enough  and  strong  enough  to  apply  it  to 
any  industry  wherein  accidents  happen.  This  conclu- 
sion is  supported  by  the  following  citations : 


123 j^.  Y.  C.  &  H.  E.  E.  V.  Williams,  199  K  Y.,  108;  Lawrence  v. 
Eutland  E.,  80  Vt,  320;  State  v.  Brown  &  Sharp  Co.,  18  E.  I.,  16; 
Shaffer  v.  Min.  Co.,  55  Md.,  74. 

12458  Ark.,  407. 

i25Lewis  V.  N.  P.  E.,  36  Mont.,  207.  See  Bedford  Quarries  Co.  v. 
Bough,  168  Ind.,  687. 


In  Knoxville  Iron  Co.  v.  Harbison,^  ^e  j-j^^  Supreme 
Court  affirmed  a  statute  requiring  cash  redemption  of 
"store  orders.'^  Replying  to  the  argument  that  the  stat- 
ute did  not  assert  reserved  power  as  was  the  case  in  St. 
Louis,  &c.,  R.  R.  Co.  v.  Paul,^^^  the  Court  said:  "It  is  also 
"true  that  inasmuch  as  the  right  to  contract  is  not  abso- 
"lute  in  respect  to  every  matter,  but  may  be  subjected  to 
"the  restraints  demanded  by  the  safety  and  welfare  of  the 
"state  and  its  inhabitants  the  police  power  of  the  state 
"may,  within  defined  limits,  extend  over  corporations 
"outside  of  and  regardless  of  the  power  to  amend  char- 
"ters.'^ 

In  an  Opinion  of  the  Justices,  as  to  extending  a 
weekly  payment  of  wages  act  to  persons  and  partner- 
ships engaged  in  manufacturing,  the  court  said:  "We 
"know  of  no  reason  derived  from  the  Constitution  of  the 
"Commonwealth  or  of  the  United  States  why  there  must 
"be  a  distinction  made  between  corporations  and  persons 
"engaged  in  manufacturing  when  both  are  engaged  in  the 
"same  kind  of  business.  The  existing  statutes  on  the  sub- 
"ject  relating  to  manufacturing  corporations  we  do  not 
"regard  as  having  been  passed  necessarily  in  amendment 
"of  their  charters.  They  relate  to  all  the  corporations 
"described  whether  there  is  any  power  reserved  in  the 
"legislature  to  amend  their  charters  or  not,  and  they  do 
"not  purport  to  have  been  passed  for  the  purpose  of  re- 
"stricting  the  corporate  power  of  the  corporation.  With- 
"out  attempting  to  define  the  limits  of  the  power  in  the 
"General  Court  of  Massachusetts  to  control  the  right  of 
"its  inhabitants  to  make  contracts  generally,  we  cannot 
"say  that  a  statute  requiring  manufacturers  to  pay  the 
"wages  of  their  employees  weekly  is  not  one  which  the 
"General  Court  has  not  the  power  to  pass  if  it  deem  it 
"expedient  to  do  so.^^^s 

126183  U.  S.,  13. 

127173  U.  S.,  404,  affirming  Leep  v.  R.,  58  Ark.,  407,  cited  above. 

128158  Mass.,  589. 


93 

The  foregoing  opinions  should  dissipate  any  idea  of 
treating  corporate  industry  as  being  peculiarly  amenable 
to  compulsory  compensation  on  the  theory  that  a  cor- 
poration, having  received  from  the  state  a  peculiar  privi- 
lege, may  be  affected  by  whatever  conditions  subsequent 
the  state  may  choose  to  impose. 

While  incorporation  is,  in  theory  of  law,  the  same 
privilege  to-day  that  it  was  in  the  days  of  rare  and 
special  charters,  it  has  become  the  convenient,  and  in 
many  cases  the  imperative  form  for  carrying  on  a  large 
part  of  the  world's  business.  The  real  value  of  the  old- 
time  privilege  is  to-day  outweighed  by  the  public  in- 
terest in  accomplishing  by  associated  effort  what  indi- 
vidual effort  could  not  obtain. 

If  the  legislature  could,  under  the  reserved  power, 
impose  burdens  upon  corporations  at  will,  a  vast  amount 
of  property  would  be  cast  beyond  the  pale  of  the  consti- 
tutional guarantees.  This  highway  to  spoliation  is 
blocked  by  the  courts,  which  hold  that  property  acquired 
under  a  corporate  franchise  is  inviolable  even  when  the 
charter  itself  is  lawfully  repealed.^^s  And,  in  my  opinion, 
the  State  cannot,  in  virtue  of  reserved  power,  impose 
upon  corporate  enterprise  conditions  which  it  could  not, 
under  the  police  power,  impose  upon  unincorporated  en- 
terprise, except  the  conditions  be  peculiarly  pertinent  to 
corporate  affairs.  Who  would  say,  for  example,  that  the 
state,  while  unable  to  fix  wages  for  a  partnership,  could 
fix  them  for  a  company?  Equally  absurd  is  the  notion 
that  a  company  could  be  affected  with  an  obligation  for 
accident  compensation  from  which  a  partnership  is 
exempt. 

MASTER  AND  SERVANT. 


Any    compensation    scheme    likely    to    be    seriously  master's 

REjSPON 

pressed  will  impose  upon  the  master  the  greater  part,  if  sibility. 
not  the  whole,  of  the  pecuniary  burden;  and  the  obliga- 


"9See  People  v.  O'Brien,  111  N.  Y.,  1. 


94 


"Contracting 
out." 


tion,  being  a  matter  of  public  policy,  cannot  be  avoided 
by  arrangements  whereby  servants  "contract  out"  of  the 
scheme,  unless  this  course  be  expressly  permitted.  Per- 
mission should  not  be  given  except,  following  English 
practice,^^^  upon  the  condition  of  substituting  an  equally 
beneficial  scheme. 

The  primary  question  of  constitutional  interest  is 
whether  an  American  legislature  may  lawfully  impose  the 
obligation. 


Obligation 
unaffected  by- 
insurance  or 
by  shifting 
cost  to 
consumer. 


It  must  be  understood  that  the  validity  of  the  obliga- 
tion does  not  depend  at  all  upon  the  master's  ability  to 
shift  its  burden  to  an  insurer.  This  is  so  not  merely  be- 
cause insurance  may  be,  in  fact,  exorbitant  or  unobtain- 
able, but  because,  on  principle,  the  validity  of  a  statutory 
obligation  shall  be  determined  according  to  its  very  na- 
ture and  not  by  any  circumstantial  ability  to  pass  it  on. 

This  principle  serves  a  more  important  purpose  in 
correcting  what  seems  to  be  a  prevalent  misconception  of 
the  force  and  effect  of  the  formula  that  industry  should 
bear  a  part  of  the  cost  of  its  accidents,^ ^^  namely,  that 
whatever  sums  the  employer  may  pay  out  under  a  com- 
pensation scheme  will  be  repaid  by  the  consumer.  Hence 
the  popular  notion  that  the  formula  is  so  conspicuously 
accurate  and  reasonable  that  a  legislature  may  effectuate 
it  as  a  matter  of  course.  But  even  if  the  ability  of  the 
employing  body  thus  to  shift  the  burden  were  as  assured 
in  fact  as  it  is  in  theory  the  circumstance  would  not  sug- 
gest the  validity  of  the  obligation. 


In  truth,  the  formula  and  its  implications  are  not 
within  the  sphere  of  our  jurisprudence.  If  the  legislature 
shall  attempt  to  exploit  the  economic  formula  the  courts 
will  first  have  to  decide  the  purely  legal  question  whether 
a  master  may  be  affected  with  an  inevitable  and  prede- 


isoSee  p.  25. 
^3iSee  p.  55. 


05 

termined  pecuniary  responsibility  for  an  accident  not 
only  beyond  his  reasonable  power  of  prevention,  but,  may- 
hap, actually  preventable  by  the  victim. 

We  have  already  denied  the  power  of  a  legislature  Absolute 
so  far  to  preclude  a  master  from  contesting  liability  in  a  ^"*^* 
workman's  suit  as  to  impose  upon  him  an  absolute  duty 
in  respect  of  accidents  regardless  of  their  cause. ^^^  Yet 
even  in  such  case  the  quantum  of  damages  would  be 
left  for  determination.  A  compulsory  compensation 
scheme  goes  farther.  In  predetermining  the  indemnity 
it  creates  absolute  duty  in  its  most  radical  shape. 

Now  the  imposition  of  an  absolute  duty,  or  let  us  say  e.  v.  zemecke 
an  absolute  liability,  regardless  of  actual  fault  or  responsi- 
bility, is  not  altogether  unknown  to  our  law.  "Our  juris- 
prudence" says  the  Supreme  Court  "affords  examples  of 
legal  liability  without  fault  and  the  disposition  of  prop- 
erty without  fault  being  attributable  to  its  owner.  The 
law  of  deodands  was  such  an  example.  The  personifica- 
tion of  the  ship  in  admiralty  law  is  another.  Other  ex- 
amples are  afforded  in  the  liability  of  the  husband  for 
the  acts  of  the  wife — the  liability  of  the  master  for  the 
acts  of  his  servants".^ ^^  So  radical  a  departure  from 
ordinary  standards  of  justice  is  rare,  and  of  the  excep- 
tional cases  cited  by  the  Court  the  last  one  only  requires 
consideration. 

An  interesting  analysis  of  the  rule  of  masters'  liability  Jf»^*®'^' 
is  thus  summarized:  common law. 

"Whatever  may  be  thought  about  the  reasons  for  this 
"rule,  two  or  three  things  are  certain  and  significant. 
'^Firsty  that  the  rule  making  the  master  liable  does  not 
"depend  upon  foundations  of  natural  justice,  but  is  de- 
"fended    upon    considerations    of    expediency.     Second, 

i32See  p.  10. 

133C.  R  I.  &  P.  E.  V.  Zernecke,  183  tJ.  S.,  586. 


96 

"that  in  all  the  cases  which  arose  during  the  time  the 
*^riile  was  taking  shape,  the  injured  person  was  a  third 
"person;  and  thirdly,  that  of  the  various  considerations 
"of  expediency  urged  in  its  support,  the  most  important 
"and  significant  contemplate  that  the  person  seeking  a 
"recovery  is  an  outsider,  in  no  way  participating  in  or 
"connected  with  the  enterprise. 

"It  is  also  true  that  the  rule  that  the  master  should  be 
"liable,  or  as  it  is  more  shortly  put,  the  rule  of  respondeat 
^^superior,  is  not  a  statement  of  a  universal  principle  at 
"all,  but  is  in  itself  an  exception  to  a  more  general  rule 
"and  is  based  merely  upon  considerations  of  expediency. 
"As  is  well  stated  by  Mr.  Beven  in  his  work  on  Negli- 
"gence :  ^There  is  no  general  rule  making  one  man  liable 
"  ^for  the  negligence  of  another.  The  rule  of  law  is  the 
"  ^other  way.  Culpa  tenet  suos  auctores  tantum.  To 
"  *this  law  there  has  long  been  an  exception  established — 
"  'that  the  master  must  answer  for  the  act  of  his  servant 
"  'when  strangers  are  injured  thereby^  (3d  ed.,  Vol.  I, 
"p.  657). "134 

Understanding  that  respondeat  superior  is  itself  an 
exception  from  the  sound  rule  that  one  man  be  not  held 
for  another's  fault,  we  perceive  that  the  courts,  in  de- 
claring the  fellow  servant  rule,  did  not,  as  is  now  fre- 
quently charged,  inject  a  discordant  note  into  the  com- 
mon law ;  on  the  contrary,  they  simply  declined  to  extend 
an  exceptional  doctrine  beyond  what  they  deemed  the 
imperative  limits  of  its  just  operation.  But  after  all  we 
might  concede  the  legislature's  right  to  extend  respondeat 
superior  to  injuries  caused  by  fellow  servants  without 
afiarming  the  principle  of  a  compensation  law,  for  this 
must  cover  all  accidents,  and  not  merely  those  attribut- 
able to  the  master  or  his  servants. 


i34Prof.  Floyd  K.  Mechem  in  Illinois  Law  Eev.,  Nov.,  1909, 
p.  249.  See  also  Mr.  E.  D.  Bobbins'  argument  in  Hoxie  v.  R., 
(82  Conn.,  352)  unfortunately  not  printed  in  the  report. 


97 

Precedent  for  a  compensation  law  is  not  found  in  the 
Supreme  Court's  illustrations  of  "legal  liability  without 
fault."  Nor  is  it  found  in  the  rule  making  common 
carriers  practically  insurers  of  goods  in  transit  except 
for  losses  arising  from  the  acts  of  God  or  of  public 
enemies,  if  only  for  the  reason  that  a  carrier's  servants 
cannot  be  accorded,  as  such,  a  constitutional  preference 
in  the  matter  of  accident  indemnity.  And  a  similar  reason 
will  suffice  to  differentiate  C.  E.  I.  &  P.  E.  v.  Zemecke,^^^ 
wherein  the  Supreme  Court  upheld  a  statute  making 
a  railway  company  liable  for  injuries  to  passengers 
in  transit,  except  where  the  accident  is  due  to  the 
victim's  criminal  negligence  or  to  his  violation  of  regu- 
lations actually  brought  to  his  notice. 

If  there  be  a  warrant  for  the  master's  duty  contem-  Duty  of 
plated  by  a  compensation  law  it  will  be  found,  not  in  servant. 
exceptional  rules  and  statutes  imposing  absolute  liability 
to  persons  other  than  servants,  nor  in  any  peculiar  rela- 
tion between  this  or  that  class  of  masters  and  servants, 
but  in  a  personal  relationship  between  all  masters  and 
servants  of  closer  intimacy  than  has  yet  been  recognized 
in  our  jurisprudence,  and  it  will  be  instructive  first  to 
view  it  in  the  light  of  duties  appertaining  to  other  rela- 
tionships. 

The  reciprocal  obligations  of  parent  and  child  are  Family 

.  ^    ^     °  ^  ,  relations. 

natural  duties,  and  I  am  not  now  concerned  to  set  any 
limit  upon  the  state's  power  to  coerce  the  neglectful 
where  the  child  is  immature  or  the  parent  aged.  At  all 
events  the  state  may  assuredly  compel  able  parents  to 
support  disabled  children  and  able  children  to  support 
disabled  parents  according  to  the  means  of  the  one  and 
the  needs  of  the  other. 

Of  marriage,  the  closest  of  contractual  connections, 

i3°183  U.  S.,  586. 


98 

it  is  sufficient  to  note  that  the  duty  of  the  husband  to 
support  the  wife  may  be  enforced  by  the  state. 

In  contrast  to  the  family  relations  that  of  master 
and  servant  is  ephemeral,  for,  excepting  the  seaman  who 
is  bound  for  the  voyage,^^^  neither  party  to  a  labor  con- 
tract can  force  its  continuance  even  though  a  term  be 
specified — the  master  may  discharge,  the  servant  leave 
at  pleasure.  In  point  of  fact  it  is,  in  the  majority  of 
cases,  of  not  long  duration,  and  in  certain  industries 
seasonal  or  casual  employment  is  the  rule. 

The  relation  of  master  and  servant  differs  radically 
from  the  family  relations  in  being  essentially  of  commer- 
cial quality,  and  our  organic  law  consistently  holds 
them  wide  apart  in  the  matter  of  responsibilities.  Who 
would  maintain,  for  example,  that  an  American  legisla- 
ture could  require  from  employers  to  workmen  that  care 
in  sickness  and  old  age  so  clearly  enjoined  in  the  family 
relations,  yet  while  these  misfortunes  are  not  so  impress- 
ive as  the  occasional  accidents,  their  resulting  hardships 
are  quite  as  distressing  in  fact  and  far  greater  in  volume. 
Accidents  Nevertheless,  accidents  which  "arise  out  of  and  in 

during 

service.  course  of  the  employment,"  to  borrow  the  words  of  the 

British  Compensation  Act,  being  broadly  referable  to 
the  commercial  relation,  are  sufficiently  differentiated 
from  all  other  misfortunes  to  suggest  a  master's  duty  in 
some  degree.  This  duty  the  law  affirms  in  prescribing  rea- 
sonable care  to  prevent  accident  and  liability  for  cas- 
ualties due  to  his  actual  or  constructive  fault;  and  the 
common  humanities — first  aid  to  the  injured  for  exam- 
ple— may  well  be  made  a  legislative  obligation. 

But  a  duty  partially  to  support  the  victim  without 
regard  to  the  cause  of  accident  would  tend  to  assimilate 
this  commercial  relation  to  the  family  bond.  Indeed,  it 
is  not  altogether  fanciful  to  say  that  they  who  declare 

"6Robertson  v.  Baldwin,  165  U.  S.,  281. 


the  duty  unconsciously  assimilate  the  workman  to  the 
serf  whose  master  was,  in  theory  of  law,  bound  to  sup- 
port his  human  chattel. 

In  calling  the  relation  of  master  and  servant  a  com- 
mercial one  I  do  not  minimize  its  obligations  of  a  social 
nature.  I  merely  emphasize  what,  from  a  legal  stand- 
point, is  its  dominant  note — the  commercial  motive  for 
the  contract  of  employment.  And  this  brings  us  to  the 
crucial  question — May  the  state  thrust  into  this  com- 
mercial contract  a  condition  that  the  master  shall  com- 
pensate the  workmen  for  all  accidents  arising  out  of 
and  in  course  of  the  employment? 


While  freedom  of  contract  is  the  rule,^^^  all  contracts  Freedom  of 

contract. 

are  subject  to  whatever  regulation  a  constitutional  pub- 
lic policy  may  demand.  For  example,  the  Supreme  Court 
has  sustained  statutes  prescribing  reasonable  regulations 
in  the  interest  of  health  and  safety,^^^  and  employers  may 
be  required  to  pay  wages  in  money. ^^^ 

The  principles  thus  far  laid  down  by  the  Supreme 
Court  do  not,  however,  forecast  the  validity  of  compul- 
sory compensation.  It  is  one  thing  to  order  an  employer 
to  take  reasonable  measures  to  prevent  accident.  It  is 
quite  another  to  order  him  to  pay  compensation  for  acci- 
dents beyond  his  normal,  or  his  possible  power  of  pre- 
vention. One  thing  to  require  him  to  pay  wages  in  money 
to  an  active  workman  and  quite  another  to  require  pay- 
ment of  part  wages  to  a  disabled  one  or  his  dependents, 
for  this  is  what  workmen's  compensation  laws  really 
involve. 

^s^AUgeyer  v.  Louisiana,  105  U.  S.,  590. 

138 Johnson  V.  S.  P.  R,  196  U.  S.,  1;  Holden  v.  Hardy,  169  U.  S., 
366;  Schlemmer  v.  R,  205  U.  S.,  1;  Mueller  v.  Oregon,  218  U.  S., 
412.    See  Lochner  v.  N.  Y.,  198  U.  S.,  45. 

is^Knoxville  Iron  Co.  v,  Harbison,  183  U.  S.,  3. 


employers. 


100 

The  movement  for  workmen's  compensation  is  largely 
inspired  by  the  concentrated  wealth  and  the  great  plants 
so  conspicuous  in  modern  industry.  But  side  by  side 
with  the  big  things  a  multitude  of  small  employers  and 
petty  industries  operate  along  the  old  lines.  If  the  mas- 
ter's duty  be  approved  on  principle  it  may,  in  point  of 
law,  be  imposed  as  well  upon  the  small  farmer  as  upon 
the  railway  company;  and  the  correlative  servant's  right 
may  be  accorded  as  well  to  a  ploughman  as  to  a  brake- 
man. 

Let  us  test  the  proposed  duty  by  the  case  of  the  house- 
holder, referring  to  a  decision  under  a  statute  enacted 
by  a  legislature  of  unlimited  powers — the  British  Work- 
men's Compensation  Act. 

A  charwoman  who  worked  for  a  householder  three 
days  in  every  two  weeks  pricked  her  finger  with  a  pin 
while  cleaning  steps.  Blood  poisoning  necessitated  am- 
putation and  the  employer  was  ordered  to  pay  her  seven 
shillings  per  week  for  permanent  incapacitation.^ ^^ 

I  am  of  the  opinion  that  so  harsh  an  exaction  would 
in  this  country  be  adjudged  arbitrary  and  extortionate — 
a  deprivation  of  property  without  "due  process  of  law." 
It  would  bespeak  a  duty  of  master  to  servant  more 
onerous  within  its  sphere  than  that  which  obtains  in  the 
family  relations.  The  father  or  husband  has  never  been, 
nor  could  he  be  required  to  contribute  beyond  his  means. 
The  master,  however,  must  pay  a  statutory  rate  regard- 
less of  his  means,  and  it  is,  from  the  viewpoint  of  legis- 
lative power,  immaterial  whether  the  rate — which  must 
be  calculated  on  a  uniform  basis  for  all  victims^  ^^^ — 
happens  to  be  actually  proportioned  to  his  means  or  not. 
And  this  burden  is  cast  upon  a  blameless  man  because  a 
servant  meets  with  injury  through  his  own  fault  or  by 
pure  misadventure. 

It  may  be  urged,  however,  that  current  proposals  do 
not  generally  affect  the  petty  employer.    This  is  true.    It 

i^oBewhurst  v.  Mather,  1908,  2  K.  B.,  Y54. 
i*o«See  p.  111. 


101  ^  .  ^  . . .  . 

may  be  asserted  that  he  never  will  be  affected.  This 
remains  to  be  seen.  But,  whether  he  be  ultimately 
affected  or  not,  if  the  duty  may  not  be  lawfully  laid  upon 
him  they  who  would  impose  it  on  the  large  and  supposedly 
well-to-do  employer  must  demonstrate  a  valid  principle 
of  differentiation. 

Considering  the  primary  question  of  constitutional 
law  involved  in  a  compulsory  compensation  system — the 
imposition  of  an  absolute  and  comprehensive  responsi- 
bility upon  employers — we  mark  at  once  a  large  measure 
of  uncertainty  and  even  dissent  among  partisans  of  the 
system.^^^  And  the  first  American  decision  on  the  sub- 
ject gives  but  a  perfunctory  assent.     "The  legislative 

i*^In  no  case  are  these  doubts  more  plainly  expressed  than  by  the 
framers  of  the  New  York  act.  We  have  seen  that  the  Commission 
rejects  all  idea  of  a  comprehensive  compensation  law  and  they  say 
of  their  limitation  to  "dangerous  trades"  "that  the  matter  is  clear 
beyond  peradventure  we  do  not  assert"   (p.  47). 

A  member  of  the  Commission  writes :  "Our  written  constitutions 
go  so  far  in  protecting  the  liberty  and  property  of  employers  that 
there  is  grave  doubt  whether  a  law  requiring  them  to  pay  even 
moderate  compensation  would  be  upheld  by  the  courts. 

"The  New  York  Commission  on  Employers'  Liability  and  Un- 
emplojTnent  created  in  1909  gave  much  thought  to  the  matter. 
In  the  preliminary  report  which  it  submitted  to  the  legislature  in 
March,  1910,  it  proposes  to  meet  the  constitutional  difficulty  by 
prescribing  a  system  of  workmen's  compensation  for  specially 
hazardous  industries,  as  a  part  of  the  policy  of  regulating  these 
industries  under  the  police  power.  For  other  industries  it  hopes 
to  secure  the  adoption  of  the  system  of  workmen's  compensation  by 
permitting  employers  and  employees  by  voluntary  agreement  to 
substitute  it  for  the  requirements  of  the  employers'  libability  law 
amended  so  as  to  weaken  some  of  the  present  defenses  of  the 
employer." — ^H.  P.  Seager,  Social  Insurance,  p.  75. 

Another  member  says:  "We  had  only  two  lawyers  in  the  State 
who  wrote  us  [226  were  addressed]  that  they  thought  a  general 
compulsory  compensation  act  similar  to  the  English  law  would  be 
constitutional,"  though  "a  great  deal  of  advice"  approved  the 
selection  of  hazardous  trades  (Proceedings,  National  Conference  at 
Chicago,  June  10-11,  1910,  p.  17).  Perusal  of  the  Proceedings 
shows  a  widespread  doubt  as  to  a  general  act  and  advocates  of  a 
limited  act  seem  not  so  sure  of  its  intrinsic  soundness  as  they  are 
of  its  popularity  with  the  voting  army  of  householders  and  farmers 
who,  it  is  supposed,  would  cheerfully  impose  upon  operators  of  rail- 
ways, mines,  etc.,  a  duty  which  could  not  be  laid  upon  themselves. 


^    ^  ^      '     '  102 

power  to  deal  with  employers'  liability  on  a  basis  other 

ivesv.R.        than  fault,"  says  Judge  Pound  in  sustaining  the  recent 

New  York  act,^^^  "jg  ^ot  clear  beyond  peradventure,  but 

"every  presumption  is  in  favor  of  the  constitutionality  of 

"the  act;  nor  do  I  find  its  constitutionality  so  doubtful 

"as  to  warrant  this  court  [a  court  of  first  instance]  in 

"holding  that  such  action  is  not  within  the  constitutional 

"powers  of  the  legislature.'' 

Opinion  I^  ^y  judgment  a  legislature  has  no  power  to  impose 

absoSite         such  a  responsibility.     I  shall  not,  however,  cut  short 

*"*^'  consideration  of  our  novel  subject  by  opposing  a  personal 

opinion,  but,  contenting  myself  with  expressing  it,  take 

up  important  questions  of  secondary  interest. 

WORKMEN'S        May  an  American  legislature  follow  the  example  of 

TioN.  Germany  and  Austria,^^^  and  oblige  a  workman  to  devote 

a  fraction  of  his  earnings  to  an  accident  fund? 

Observe  that  there  is  no  question  here  of  forced  con- 
tributions to  present  needs  as  where  a  capable  head  of  a 
family  is  ordered  to  pay  for  their  maintenance.  The  im- 
mediate question  is  whether  the  state  may  prescribe  thrift 
in  contemplation  of  a  possible  disablement ;  and  this  is  a 
branch  of  the  broader  question  as  to  its  prescription  in 
view  of  the  relatively  probable  incapacities  from  sickness 
and  old  age. 

But  even  if  the  state  may  prescribe  for  all  men  a  meas- 
ure of  the  latter  sort,  it  does  not  follow  that  it  may  compel 
a  "workman"  to  contribute  to  an  accident  fund,  which  is 
created  for  a  "class"  as  distinguished  from  the  community 
at  large. 

The  solidarity  of  "labor"  is  being  strenuously  advo- 

i42lves  V.  South  Buffalo  R.,  Buffalo,  Sept.  28,  1910.  On  Oct.  21 
the  decision  was  affirmed  by  the  Appellate  Division,  without  opinion, 
one  judge  dissenting,  and  the  case  is  on  its  way  to  the  Court  of 
Appeals. 

^*^See  p.  22.  The  New  York  Commission  would  prefer  to  add  to 
the  employers'  contribution  of  fifty  per  cent,  of  earnings  a  work- 
men's contribution  of  twenty-five  per  cent.,  but  "see  no  way  to 
accomplish  this  by  force  of  compulsory  law"  (Report,  p.  67). 


103 

cated;  it  is  being  realized  in  some  degree;  but  it  is  not 
yet  assimilated  in  our  jurisprudence  to  the  solidarity  of 
tlie  family,  on  the  one  hand,  or  to  that  of  the  community 
on  the  other.  However,  if  it  shall  be  held  that  a  legisla- 
ture can  so  reverse  our  traditional  conceptions  of  legal 
responsibility  as  to  compel  the  master  to  compensate  for 
all  accidents  regardless  of  their  cause,  this  relatively 
minor  matter  of  workmen's  contribution  may  well  take 
the  same  course. 

If  workmen  cannot  be  affected  with  direct  contribu- 
tions to  compensation  it  may  happen  that  indirect  con- 
tributions will  be  obtained  by  employers  by  shaving  the 
wage  scale,  in  case  the  compensation  rate  is  so  high  as 
to  necessitate  searching  economies  in  cost  of  production. 
But  whether  or  not  workmen  shall,  directly  or  indirectly, 
give  pecuniary  aid  to  a  compensation  scheme  they  should, 
in  certain  callings,  be  made  to  give  it  moral  support  by 
observing  safety  rules.  Several  States  have  already  made 
infractions  of  certain  safety  regulations  misdemeanors,^ ^^ 
and  we  may  find  it  expedient  to  make  a  liberal  use  of  the 
German  practice  of  imposing  small  fines  for  infractions. 

Furthermore,  it  is  worth  considering  whether  the 
wholesome  principle  of  Farmer  v.  Kearney^  *^  cannot  be 
worked  into  a  compensation  scheme.  Surely  when  work- 
men force  upon  the  master  a  servant  of  their  choos- 
ing there  should  be  at  least  a  reduction  of  compensation 
in  case  accident  results  from  his  incompetency  or  mis- 
conduct. 

Here  is  a  good  place  to  emphasize  the  true  position 
of  accident  compensation  in  the  workman's  list  of  wants. 
We  in  America  perceive  constitutional  as  well  as  eco- 
nomic obstacles  to  assuring  every  one  that  "right  to 
work"  which  some  foreign  politicians  are  dallying  with, 

^**See,  for  example,  Pennsylvania  Mining  law,  Brightly's  Digest, 
1895,  s.  384;  Utah  Mining  law,  Comp.  Laws  1907,  s.  1524. 
i*5See  p.  7. 


but  we  realize  that  opportunity  to  work  is  the  workman's 
first  need.  Like  obstacles  discourage  the  enactment  of  the 
"living  wage,"  but  linked  with  opportunity  to  work  is  the 
fair  reward.  Only  when  work  is  abundant  and  wages 
fair  are  casualties  to  the  few  of  prime  concern  to  work- 
men as  a  whole,  and  prevention  is  of  greater  concern 
than  compensation.  A  compensation  scheme  will  be  dis- 
tinctly injurious  if,  by  reason  of  its  cost,  it  shall  substan- 
tially curtail  work  or  wages.  It  will  be  defective  unless 
it  shall  be  accompanied  by  suitable  measures  of  dis- 
cipline tending  to  prevent  accident. 

INSURANCE. 

We  have  pointed  out  the  practical  need  of  insurance 
in  relation  to  compensation  and  we  insist  that  no  scheme 
will  be  fair  unless  it  be  accompanied  by  a  reasonable 
opportunity  for  distributing  the  risks  at  a  reasonable 
cost.  We  have  shown  that  in  some  foreign  systems  in- 
surance is  voluntary  and  in  others  compulsory. ^^^ 

Premising  that  when  insurance  is  compulsory  it  neces- 
sarily supersedes  an  employer's  individual  responsibility 
whether  it  be  undertaken  by  a  public  institution  or  by  an 
association,  and  that  when  it  is  voluntary  the  location  of 
responsibility  depends  on  the  statute,  we  consider  the 
attitude  of  our  legislatures  toward  insurance. 

COMPANY  Considering  that  insurance  companies  are  purely  pri- 

INSURANCE.  .        °.  ^  i:'  J    f 

vate  organizations  of  commercial  purpose,  there  is  no 
reason  to  suppose  that  the  state  would,  and  I  deny  that  it 
could  prescribe  them,  or  any  of  them,  as  the  recourse 
of  the  employer.  But  they  are  likely  to  play  an  im- 
portant part  in  any  comprehensive  scheme,  for  an  em- 
ployer who  can  neither  carry  his  own  risk  safely  or  dis- 
tribute it  in  a  mutual  association  will  be  driven  to  them. 
I  say  "driven"  advisedly,  because  this  course  means  the 

i*«See  pp.  32,  33. 


106 

intervention  oi  a  commercial  concern  which  for  its  own 
protection  will  frequently  be  compelled  to  contest  claims 
which  master  and  servant  would  adjust.  Furthermore, 
associations,  having  no  concern  for  profits,  operate,  when 
soundly  organized,  at  a  lower  cost  than  companies. 

While  a  few  employers  may  be  unable  to  insure  their 
compensation  obligations  in  conservative  companies  be- 
cause of  the  extraordinary  hazard  of  their  industry,  op- 
portunity for  insurance  will,  generally,  be  commensurate 
witli  the  need,  and  how  far  it  shall  be  embraced  depends 
upon  the  security  and  the  cost. 

Concerning  security,  we  may  assume  that  responsible 
companies  will  furnish  ample  facilities,  except  so  far  as 
state  exclusion  laws  may  restrict  their  range;  and  the 
legislature  should,  as  I  urge  elsewhere,^  ^^  provide  that  in- 
surance in  approved  companies  shall  shift  the  employer's 
obligation. 

Concerning  cost  it  is  evident  that  if  commercial  in- 
surance is  to  be  a  permanently  useful  factor  the  premium 
rates  must  attract  the  insured  and  profit  the  insurer.  In 
this  relation  British  experience  is  of  interest.  After  the 
Compensation  Act  of  1897,  the  companies  charged  for  the 
new  risks  much  larger  premiums  than  for  employer's 
liability,  and  so  with  the  industries  added  by  the  sweep- 
ing act  of  1906.  Yet  the  new  premiums  do  not  seem  to 
be  generally  remunerative.  An  insurance  journal  after 
giving  the  company  returns  for  1908,  says:  "A  margin 
so  meagre  as  1.26,  or  even  1.55  per  cent.,  affords  neither 
protection  for  risk  of  capital  nor  opportunity  for  divi- 
sion of  profit,  and  it  is  doubtful  whether  the  investment 
of  the  funds  at  interest  can  yield  an  average  of  more 
than  2  per  cent,  in  the  premium  income."^^^ 

"^See  pp.  109,  131. 

^^^Post  Magazine  and  Monitor,  Dec.  25,  1909.  See  also  N.  Y. 
Journal  of  Commerce,  Mar.  28,  1910.  Commercial  insurance  in 
France  seems  to  be  quite  as  unsatisfactory  as  in  England.  See 
VIII  Congres  des  Assurances  Sociales,  p.  777. 


106 

In  view  of  foreign  experience  we  should  not  enact 
a  compensation  law  which  is  likely  to  entrain  recourse  to 
commercial  insurance  without  an  approximate  idea  of 
how  our  companies  will  play  their  part,  for  even  if  the 
employer's  responsibility  shall  be  maintained  in  law  it 
will  not  be  justified  in  fact  if  he  be  unable  to  insure  his 
risk  at  a  reasonable  cost. 

Of  the  action  taken  by  insurance  companies  in  view 
of  the  New  York  compulsory  compensation  act,  we  have 
only  to  say  that  the  rates  for  the  new  risks  are  naturally 
much  higlier  than  tlie  old  employer's  liability  rates. 
Judging  from  foreign  experience,  these  rates  are  not 
likely  to  be  lowered.  Whether  they  shall  be  raised  de- 
pends upon  conditions  yet  undeveloped,  and  especially 
upon  the  judicial  interpretation  of  the  act. 

Advised  that  the  private  company  is  available  only 
in  connection  with  voluntary  insurance,  as  in  Great 
Britain  or  as  a  permissible  alternative  to  official  metliods 
of  compulsory  insurance  as  in  The  Netherlands  we 
perceive  that  the  normal  basis  of  compulsory  insur- 
ance is  a  fund  furnished  by  the  parties  responsible  for 
compensation  and  administered  either  by  themselves  as 
in  the  German  associations  or  by  some  official  institution 
as  in  Sweden. 


GOVERN-  Whether   an    American    Qovernment   or   one   of   its 

MENT  IN-  ^ 

suRANCE.  agencies  is  authorized  to  collect  and  administer  an  acci- 
dent insurance  fund  is  a  novel  and  a  doubtful  question, 
but  I  shall  not  labor  the  point  here  because  we  might 
concede  its  authority  yet  doubt  its  ability  to  assure  an 
impartial,  economical  and  efficient  administration. 

EMPLOYERS'        Tumlug  to  compulsory  associations  of  employers  we 
TioNs.   "       could  not,  for  all  industries,  adopt  that  admirable  fea- 
ture of  the  German  associations — the  grouping  by  in- 
dustries and  not,  as  in  Austria,  by  districts.     For  the 


107 

German  associations  operate  without  regard  to  State 
boundaries,  while  here  associations  by  industry  would 
be  multiplied  by  as  many  States  as  a  particular  industry 
should  cover.  This  parcelling  would  in  many  cases  re- 
sult in  organizations  differing  widely  in  cost  and 
efficiency. 

More  importantly,  the  compulsory  association  of  em-  constitutional 
ployers  grouped  according  to  the  will  of  the  state  would  S?n?s"^^^' 
raise  a  grave  question  of  constitutional  power.  We  have 
much  legislation  forbidding  individuals  to  associate  for 
certain  purposes  deemed  inimical  to  public  welfare,  but  to 
compel  the  association  of  individuals  is  a  different  mat- 
ter, and  I  doubt  the  validity  of  statutes  compelling  em- 
ployers generally  to  so  far  sacrifice  their  independence  as 
to  associate  themselves  in  the  foreign  fashion — especially 
if  they  include,  as  they  should,  the  provision  of  the  Ger- 
man law  giving  certain  rights  of  mutual  visitation  and 
search  for  the  purpose  of  discovering  violations  of  safety 
rules.  Our  courts  will  not  say  that  there  is  in  the  various 
branches  of  industry  a  natural  relation  which  an  Amer- 
ican legislature  may  seize  upon  as  an  excuse  for  imposing 
a  legal  connection. 

Were  we  concerned  only  with  certain  markedly  indi- 
vidualistic industries  we  might  find  at  least  some 
economic  reason  for  their  connection,  but  the  variety  of 
modern  industry  would  necessitate  much  grouping  of  a 
wholly  arbitrary  character.  And  how  completely  the 
grouping  in  foreign  systems  is  dictated  by  convenience  is 
illustrated  in  Austria,  where  employers  are  grouped  by 
territorial  districts  and  not  by  industries. 

Finally,  a  compulsory  association  of  employers  means 
that  A,  B  and  C  are  each  affected  with  a  measure  of 
pecuniary  responsibility  for  accidents  in  others'  estab- 
lishments; and  when  the  establishments  are  classified,  as 
in  Germany,  according  to  their  respective  accident  risks 


108 

and  the  contributions  graded  accordingly,^*^  the  law  of 
averages  is  in  the  long  run  supposed  to  relieve  each  em- 
ployer from  disproportionate  payments. 

An  American  scheme  without  such  classification 
would  deny  to  some  contributors  "the  equal  protection  of 
the  laws/'  Hence,  if  different  industries  be  grouped 
together,  as,  for  example,  in  Austria  and  Hungary,^ '^^ 
the  paper  maker  should  pay  a  lower  rate  than  the  powder 
maker,  or,  if  like  industries  be  grouped,  the  risk  varia- 
tions of  the  several  establishments  should  be  met  by  differ- 
ential rates  as  in  Germany^^^ — a  point  which  is  ignored 
in  the  Montana  and  Maryland  compensation  acts. 

But  no  device  for  neutralizing  mutual  obligations 
would  conceal  the  fact  that  the  legislature,  in  prescribing 
an  association,  imposes  immediately  upon  each  member 
an  absolute  duty  in  respect  of  accidents  in  establish- 
ments having  no  connection  with  his  own  save  the  one 
arbitrarily  declared  by  the  statute.  Even  those  who 
would  hold  an  employer  responsible  for  all  accidents  in 
his  own  works  will,  I  think,  perceive  the  unconstitu- 
tionality of  a  statute  projecting  his  responsibility  into 
another's. 

The  gist  of  my  argument  against  compulsory  associa- 
tion is  that  the  enforced  contribution  to  a  common  in- 
surance fund  involves  an  unconstitutional  spreading  out 
of  individual  responsibility.  Hence  the  argument  applies 
as  well  to  a  fund  controlled  by  a  public  authority  as  to 
one  administered  by  the  employers  themselves. 

Review.  Rcviewing  our  discussion  I  am  of  the  opinion  that, 

because  companies  are  private  commercial  agencies,  the 
legislature  cannot  prescribe  insurance  in  them,  nor  can 
it  prescribe  contributions  to  a  mutual  insurance  fund 

i*»See  p.  40. 
i^^See  p.  43. 
isiSee  p.  40. 


109 

because  this  would  impose  upon  independent  employers 
unconstitutional  responsibilities  in  respect  of  each  other's 
misfortunes  and  delinquencies  as  these  affect  each  other's 
servants. 

Unless  there  shall  be  devised  some  other  method  of 
compulsory  insurance  free  from  constitutional  defects 
there  remains  only  voluntary  insurance,  and  herein  we 
should  prefer  the  French  to  the  British  system — we 
should  allow  an  employer  to  shift  his  obligation  by  in- 
suring in  an  approved  institution  whether  this  be  a  com- 
pany or  a  voluntary  association.^  ^^ 

"equal  protection  of  the  laws." 

A  workmen's  compensation  statute  is  essentially  class 
legislation  and  none  may  be  drawn  without  more  or  less 
classification  of  a  particular  kind. 

Now  the  States  of  the  Union  are  forbidden  by  the 
Federal  Constitution  to  deny  to  anyone  "the  equal  pro- 
tection of  the  laws,"  and  the  broad  purpose  of  the  pro- 
hibition is  to  prevent  invidious  discrimination  while  leav- 
ing free  that  power  of  reasonable  classification  so  essen- 
tial to  efficient  lawmaking. 

Were  the  Constitution  construed  like  a  private  docu- 
ment the  fact  that  the  prohibition  is  expressly  laid  upon  Federal 
the  States  alone  might  imply  that  the  United  States  ^'■°^^^^"°°' 
are  free  to  single  out  persons  or  classes  or  sections  for 
invidious  benefits  or  burdens.  But  the  corner  stone  of 
the  Republic  is  the  equal  rights  of  a  free  people.  If  this 
axiom,  which  was  at  a  late  date  in  our  history  emphasized 
only  through  fear  of  local  discrimination  against  the 
freed  negro,  needs  chapter  and  verse  for  its  national 
obligation,  the  clause  of  the  Fifth  Amendment  forbidding 
the  United  States  to  deprive  anyone  of  life,  liberty  and 

^^^See  p.  105. 


110 

property  "without  due  process  of  law"  will  serve.  For 
who  will  deny  the  negro's  right  to  the  "equal  pro- 
tection of  the  laws"  of  the  United  States  as  well  as  those 
of  the  States. 

Understanding  that  the  States  are  expressly,  and  the 
United  States  implicitly  governed  by  some  rule  of  equal- 
ity, and  that  any  initial  compensation  scheme  likely  to 
be  proposed  will  single  out  certain  employers  for  its  bur- 
dens and  exclude  certain  employees  from  its  benefits,  the 
question  is  whether  or  how  far  a  selective  process  will  be 
compatible  with  the  rule. 

The  rule  of  equality  does  not  oblige  us,  in  framing 
a  compensation  law,  immediately,  or  ever,  to  do  what 
Great  Britain  did  after  some  years  of  experiment  with 
selected  industries — namely,  embrace  practically  all  mas- 
ters and  servants ;  though  I  maintain  that,  from  a  consti- 
tutional standpoint,  if  any,  then  all  can  be  embraced.^  ^^ 

On  the  theory  that  in  petty  establishments  the  acci- 
dent risk  is  relatively  slight,  I  should  make  no  difficulty 
in  excepting  them  from  a  compensation  law,  as  they  were 
in  England,  under  the  Act  of  1897,  distinguishing  "work- 
shops" from  "factories,"^^*  and  as  they  are  generally  in 
Continental  Europe. ^^^ 

The  Supreme  Court  has  sustained  an  exemption  of 
mines  employing  less  than  ten  men  from  the  obligation 
of  a  check  weighing  act,^^^  and  the  principle  of  decision 
would  seem  to  warrant  the  exception  of  petty  plants 
from  a  compensation  law. 

Exemption  of         The  excmptiou  of  certain  employments  from  a  com- 
empioyments.  p^j^g^tion  law  eutraius  of  course  the  exclusion  of  the 

i^^See  pp.  100,  142. 

i5*See  p.  18. 

"5See  p.  18. 

i5«St.  Louis  Coal  Co.  v.  HI.,  185  TJ.  S.,  206. 


Ill 

masters  and  servants  connected  therewith  and  thus  leads 
indirectly  to  a  personal  classification. 

Coming  to  direct  personal  classification  it  seems  only  Personal 
necessary  to  say  of  employers  that  there  must  be  no  dis-  ^'^^^^^^^"°'^- 
crimination  among  them  based  upon  an  arbitrary  estima- 
tion of  their  personalities.  For  example,  the  decisions 
that  corporations,  as  such,  cannot  be  singled  out  for  an 
employers'  liability  not  imposed  upon  individuals  and 
partnerships,  apply,  a  fortiori ,  to  a  compensation  law.^^^ 

In  regard  to  the  personal  classification  of  employees, 
we  find  that  while  the  employer  may  not  be  expressly  in- 
cluded because  of  his  financial  resources,  the  omission  of 
employees  on  this  score  is  not  only  permissible  but  advisa- 
ble. For  the  proper  purpose  of  a  compensation  law  is  to 
aid  the  employees  whose  earnings  are  presumably  too 
small  to  tide  over  the  effect  of  accident  and  those  of 
higher  estate  are  properly  omitted  by  grouping  the  bene- 
ficiaries under  a  wage  limit. 

We  have  seen  that  this  is  the  rule  abroad,  excepting 
in  England,  where  the  manual  workers  are  distinguished 
from  all  others  in  being  freed  from  the  limit^^^ — an  excep- 
tion repugnant  to  our  rule  of  equality. 

Whatever  workmen  are  included  in  a  compensation 
law  must  be  on  an  equal  footing  in  regard  to  compensar 
tion  figures,  whether  these  be  expressed  in  money  or  in 
rate  of  wages,^^^  and  I  repeat  that  if  a  legislature  shall 
commence  a  compensation  system  with  the  richer  indus- 
tries, it  is  enjoined  to  a  moderate  compensation  that  will 
permit  its  later  extension  to  the  poorer  ones. 

Broadly  speaking,  it  will  be  a  nicer  task  to  pick  out 
workmen  for  benefits  than  employers  for  burdens,  for  the 
whole  purpose  of  a  compensation  system  is  to  benefit 

^"Ballard  v.  Oil  Co.,  81  Miss.,  507;  Bedford  Quarries  Co.  v. 
Bough,  168  Ind.,  675;  Kline  v.  Iron  Co.,  96  Minn.,  66.  See  also 
L.  &  N.  K.  V.  Melton,  218  U.  S.,  36. 

issSee  p.  21. 

i^^Austria,  be  it  noted,  gives  railway  employees  a  preference  in 
the  matter  of  compensation.     Frankel  and  Dawson,  p.  121. 


11» 


workmen,  not  to  burden  employers,  and  even  if  the  courts 
accept  the  argument  that  an  employer's  burden  will  be 
ultimately  shouldered  by  the  consumer,^^^  they  must  still 
find  a  just  reason  for  leaving  workmen  who  are  excluded 
from  the  law  to  bear  the  full  weight  of  the  accident  whose 
incidence  is  lightened  for  their  preferred  brethren. 


Selection  of 
•mployments. 


Selection 
among 
hazardous 
employments. 


Decisions  on 

Liability 

Acts. 


The  principal  classification  in  the  foreign  compen- 
sation laws  is  the  selection  of  employments — none  save 
the  British  law  being  all-embracing^^^ — and  the  principle 
of  selection  is,  broadly,  the  inclusion  of  hazardous  and  the 
exclusion  of  non-hazardous  employments. 

Our  courts  recognize  a  legislative  power  to  differ- 
entiate hazardous  from  non-hazardous  employments  in 
subjecting  the  former  to  special  regulation — as  for  ex- 
ample in  statutes  prescribing  safety  appliances,  sanitary 
rules,  etc.  I  see  no  reason  to  deny  a  like  power  in  fram- 
ing a  workmen's  compensation  law  to  the  extent,  at 
least,  of  excluding  non-hazardous  employments,  though  I 
dissent  emphatically  from  the  suggestion  that  those  em- 
ployers who  are  engaged  in  hazardous  industries  can 
alone  be  constitutionally  affected. ^^^ 

But  how  shall  compensation  laws  deal  with  employ- 
ments that  may  be  fairly  classified  as  hazardous.  May 
one  be  taken  and  another  left?  May  the  law  embrace 
the  employees  of  an  industry  who  are  not  actually  work- 
ing on  its  hazardous  side? 

The  Supreme  Court  says,  in  passing  upon  an  em- 
ployers' liability  act,  that  all  persons  must  be  "treated 
alike  under  similar  circumstances  and  conditions  in 
respect  both  of  the  privileges  conferred  and  the  liabilities 
imposed."^^^  This  generalization  illustrates  the  rule  of 
equality  and  we  inquire  as  to  its  application  to  a  com- 

i«oSee  p.  55. 
i«iSee  p.  18. 
i«2See  p.  88. 
i63Missouri,  &c.,  E.  v.  Mackey,  127  U.  S.,  205. 


pensation  system,  first  considering  some  decisions  on  em- 
ployer's liability  acts. 

In  Missouri  R.  v.  Mackey,  the  Supreme  Court  held  ^-  v-  lackey. 
that  a  Kansas  statute  qualifying  the  fellow  servant  rule 
in  the  case  of  railroad  companies  alone  did  not  deny  them 
the  equal  protection  of  the  laws.  "The  hazardous  char- 
"acter  of  the  business  of  operating  a  railway,"  said  the 
Court,  "would  seem  to  call  for  special  legislation  with 
"respect  to  railroad  corporations,  having  for  its  object 
"the  protection  of  their  employees  as  well  as  the  safety 
"of  the  public.  The  business  of  other  corporations  is  not 
"subject  to  similar  dangers  to  their  employees,  and  no 
"objection,  therefore,  can  be  made  to  the  legislation  on 
"the  ground  of  its  making  an  unjust  discrimination."^^* 

The  doctrine  of  the  Mackey  case  has  been  reaffirmed 
by  the  Court,  and  it  is  settled  that  railroads  may  be  sin- 
gled out  for  statutory  qualification  of  the  fellow  servant 
rule.^^5 

In  another  case,  the  Supreme  Court  sustained  a  stat- 
utory proviso  declaring  that  a  qualification  of  the  fel- 
low servant  rule  in  the  case  of  railroads  in  general  should 
not  apply  to  lines  in  course  of  construction  and  not  open 
to  the  public,  saying,  "there  is  no  objection  to  legislation 
"being  confined  to  a  peculiar  and  well  defined  class  of 
"perils."^^^  The  emphasis  here  laid  upon  the  actual  opera- 
tion of  a  railway  is  even  more  sharply  accentuated  in 
several  state  decisions  which  hold  that  a  statute  qualify- 
ing, in  terms,  the  fellow  servant  rule  for  all  the  employees 
of  a  railway  company  cannot,  constitutionally,  be  applied 
to  employees  who  are  not  engaged  on  what  is  called  the 
hazardous  side  of  the  business — that  is  to  say,  the  opera- 
tion of  the  railway — for  to  include  clerks,  laborers,  etc., 


164127  U.  S.,  205. 

i«5Tullis  V.  E.,  175  U.  S.,  348. 

i«6Minn.  Iron  Co.  v.  Kline,  199  U.  S.,  593. 


114 


R.  V.  Melton. 


would  deny  the  equal  protection  of  the  laws  to  clerks 
and  laborers  in  other  callings. ^^^ 

In  the  recent  case  of  Louisville  and  Nashville  K.  v. 
Melton,^  ^^  the  Supreme  Court  of  the  United  States 
reaches  a  different  conclusion.  The  Indiana  Employers' 
Liability  Act  of  1893  is  directed  to  every  railroad  and 
other  corporation  except  municipal.  The  state  and  federal 
courts  agreed  that  it  was  effective  as  to  railroads  in  re- 
spect of  employees  engaged  in  moving  trains,^ ^^  but  the 
state  courts  had  not  only  practically  declared  the  act  in- 
valid except  as  to  railroads, ^^^  but,  following  as  they 
thought  the  true  construction  of  the  federal  rule  of 
equality,  had  restricted  it  to  employees  in  train  service.^^^ 

The  Supreme  Court  in  the  Melton  case  disapproves 
this  restriction.  It  affirms  judgment  in  a  suit  under 
the  act  brought  and  won  in  the  courts  of  Kentucky  by  a 
carpenter  who  was  injured  in  the  course  of  railway  con- 
struction work.  The  Court  deals  with  railways  alone  and 
says  in  effect  that  the  power  to  impose  upon  them  a 
singular  liability  because  of  their  singular  hazard  is  not 
limited  to  workmen  in  the  hazardous  side  of  their  busi- 
ness but  applies  to  all  their  employees. 


Compensa- 
tion schemes. 


Considering  now  the  "equal  protection  of  the  laws'' 
respecting  the  relation  of  a  compensation  scheme  to 
hazardous  employments  I  shall  not  assert  in  advance 
that  a  scheme  is  essentially  defective  because  it  omits 
this  or  that  dangerous  trade  or  even  singles  one  out — 
possibly  either  classification  may  be  justified  by  some 
peculiarity  in  the  scheme  or  in  the  trade. 

I  maintain,  however,  that  the  exceptional  subjection 


i«TM.  K  &  T.  R  V.  Medario,  60  Kan.,  151;  Deppe  v.  K.,  36  Va., 
32;  Jennings  v.  R.,  96  Minn.,  302. 

i«8218  U.  S.,  36. 

i69Tullis  V.  R.,  175  U.  S.,  348. 

i^oSee  Bedford  Quarries  Co.  v.  Bough,  168  Ind.,  675. 

i^ilndianapolis  &  R.  v.  Kinney,  171  Ind.,  612;  C,  C.  &  S.  L.  R. 
V.  Foland,  Apr.,  1910. 


115 

of  railroads  to  liability  laws  should  not  be  projected  into 
a  compensation  scheme  not  only  for  the  broad  reasons 
presently  given,  but  for  this  specific  reason.  The  preg- 
nant statement  in  the  Mackey  case  that  the  business  of 
"corporations  [other  than]  railways  is  not  subject  to 
similar  dangers  to  their  employees' '^^^  jg  conspicuously 
erroneous,  as  a  glance  at  the  rate  tariffs  of  insurance 
companies  will  show.  There  sliould  be  no  broader  ap- 
plication of  so  inaccurate  a  statement. 

In  the  Mackey  case  Mr.  Justice  Field  said  of  the  rail- 
way liability  in  question:  "As  said  by  the  court  below 
it  is  simply  a  matter  of  legislative  discretion  whether  the 
same  liability  shall  be  applied  to  carriers  by  canal  and 
stage  coach  and  to  persons  and  corporations  using  steam 
in  manufactures. "^^^ 

I  am  convinced  that  the  legislature  has  not  such  power 
of  picking  and  choosing  in  framing  a  workman's  com- 
pensation law  and  I  cite  first  a  recent  decision  of  a  cir- 
cuit court  of  the  United  States  denying  this  power  even 
in  employers'  liability  legislation. 

In  Chicago,  Milwaukee  &  St.  Paul  R.  v.  Weston,^'^*  the  r.  v.  weaton. 
court  speaking  by  Judge  Sanborn  said  that  the  North 
Dakota  Employers'  Liability  Act  of  1907,  which  for  all 
common  carriers  and  all  their  employees  abrogated,  inter 
alia,  the  fellow-servant  rule  denied  the  equal  protection 
of  the  laws  to  persons  in  substantially  similar  conditions. 

Judge  Sanborn  concedes  that,  owing  to  the  peculiar 
position  in  which  the  courts  have  placed  the  railways, 
the  act  might  be  valid  had  it  applied  to  them  alone,  but 
he  properly  declines  to  effectuate  for  railroads  only  a 
statute  intended  for  "any  common  carrier,"  and  declares 
the  act  invalid,  saying:  "This  statute  denies  the  equal 
"protection  of  the  law  to  persons  in  the  same  situations 

172127  U.  S.,  210. 
"3127  U.  S.,  210. 
17*178  Fed.  R,  619. 


116 

"and  circumstances  relative  to  the  subject-matter  of  this 
"legislation.  There  is  no  reason  of  necessity  or  propriety 
" — there  is  no  reason  whatever  that  occurs  to  us — why  a 
"common  carrier  should  be  subjected  to  liability  to  his 
"bookkeeper  or  to  his  clerk  in  his  general  offices,  or  to 
"his  driver  or  loader  of  his  dray  or  truck  or  to  any  other 
"of  his  servants  who  is  not  actually  engaged  in  some  such 
"hazardous  occupation  as  operating  engines  or  trains,  or 
"handling  or  working  about  machinery,  while  the  mer- 
"chant,  the  manufacturer,  and  all  other  persons  are 
"exempt  from  such  liabilities  to  their  servants  engaged 
"in  the  performance  of  the  same  work  under  tlie  same 
"circumstances.  And  there  is  no  just  reason — nay  there 
"is  no  reason  whatever  that  we  can  ascertain — why  such 
"servants  of  common  carriers  who  are  not  engaged  in 
"any  dangerous  or  hazardous  occupation  should  be 
"granted  the  right  and  privilege  of  recoveries  from  their 
"masters  for  damages  caused  by  the  negligence  of  their 
"fellow  servants  which  their  own  negligence  contributed 
"to  cause,  while  the  servants  of  other  persons  doing  the 
"same  work  in  the  same  situation  and  circumstances  are 
"denied  this  right  and  privilege.  The  discrimination 
"which  this  statute  works  violates  the  indispensable  condi- 
"tions  of  a  constitutional  classification.  There  is  no  dif- 
"ference  between  the  situation  and  circumstances  of  all 
"the  members  of  the  class  which  the  statute  forms  and 
"those  of  all  other  masters  and  servants  in  the  state 
"relative  to  the  subject-matter  of  this  legislation  that 
"presents  any  natural  or  sound  or  just  reason  of  neces- 
"sity  or  propriety  for  tlie  difference  in  their  liabilities 
"and  rights  it  attempts  to  make,  and  it  does  not  bring 
"under  its  influence  all  masters  and  servants  who  are 
"in  a  situation  and  in  circumstances  relative  to  its  sub- 
"ject-matter  indistinguishable  from  those  of  members  of 
"the  class.  All  employes  of  those  who  are  not  common 
"carriers  who  are  engaged  under  similar  circumstances 
"in  the  same  or  similar  occupations  to  those  of  the  em- 


117 

"ployes  of  common  carriers  that  are  not  engaged  in 
"dangerous  occupations  are  entitled  to  the  same  rights 
"of  action  and  to  the  same  privileges  that  are  granted  to 
"such  servants  of  common  carriers,  and  the  denial  of 
"them  by  this  statute  is  a  denial  of  the  equal  protection 
"of  the  laws.  And  all  common  carriers  are  entitled  to 
"the  same  exemption  from  liability  to  their  employes,  who 
"are  not  engaged  in  any  dangerous  occupation,  for  in- 
" juries  caused  by  the  negligence  of  their  fellow-servants 
"which  their  own  negligence  contributed  to  cause  that 
"other  employers  enjoy.  The  statute  deprives  them  of 
"this  exemption  and  thereby  denies  to  them  the  equal 
"protection  of  the  laws.  Because  there  is  no  sound 
"reason  of  necessity  or  propriety  for  the  difference  of 
"liabilities  and  rights  which  this  law  makes  between  the 
"members  of  the  class  it  forms  and  the  other  masters  and 
"servants  in  the  state  in  the  same  situation  and  circum- 
"stances  as  members  of  the  class,  and  because  it  does  not 
"include  and  subject  to  its  provisions  all  masters  and 
"servants  in  the  state  who  are  in  the  same  situation  and 
"circumstances  relative  to  the  subject-matter  of  the  legis- 
"lation  as  are  members  of  the  class  it  forms,  the  conclu- 
"sion  has  been  irresistibly  forced  upon  our  minds  that 
"this  statute  denies  to  many  citizens  the  equal  protection 
"of  the  laws  and  violates  the  fourteenth  amendment  to 
"the  constitution.'' 

As  the  Indiana  statute  which  the  Supreme  Court 
upheld  as  to  railroads  in  the  Melton  case^^^  emphasized 
these  corporations  in  defining  its  subjects,  the  Court,  if 
called  upon  to  consider  the  broader  question  presented 
by  the  North  Dakota  Act,  may  differentiate  them  and 
consistently  approve  the  admirable  reasoning  of  the  Cir- 
cuit Court,  but  whether  or  not  Judge  Sanborn's  opinion 
shall  prevail  in  respect  of  employers'  liability  it  pre- 
figures the  just  relation  of  the  rule  of  equality  to  the 
matter  of  workmen's  compensation. 

175218  U.  S.,  36. 


118 

e^uafit  in  Compensation  plans  will,  as  I  have  intimated,  require 

compensation  a  broader  treatment  than  is  called  for  by  mere  qualifica- 
tions of  common  law  rules.^^^  It  is  one  thing  to  hold  that 
railway  masters  and  servants  may  be  singled  out  for  a 
modification  of  the  fellow  servant  rule.  It  is  another 
and  a  more  serious  thing  to  hold  that  this  employer  shall 
bear  the  burden  of  all  accidents  and  that  one  conducting 
an  equally,  perhaps  a  more  hazardous,  business  shall  go 
free;  that  this  workman  shall  be  compensated  for  an 
accident  loss  which  that  one,  subject  to  substantially 
equal,  perhaps  greater,  risk  shall  continue  to  bear. 
Instead  of  conferring  mere  rights  of  action  here  and 
there  compensation  laws  create  a  social  class  as  truly 
as  do  the  pauper  laws — though,  unlike  these,  a  class  with- 
out a  stigma.  As  Professor  Dicey  says:  "The  rights 
"of  workmen  in  regard  to  compensation  for  accidents 
"have  become  a  matter,  not  of  contract,  but  of  status."^'^'^ 
Our  discussion  will  at  least  indicate  the  need  of  ex- 
treme care  in  the  drafting  of  a  compensation  act  lest  it 
deny  someone  "the  equal  protection  of  the  laws,"  and  Mr. 
Justice  Bradley's  generalization  might  well  have  been 
framed  in  view  of  this  very  workmen's  compensation  sys- 
tem :  "Clear  and  hostile  discriminations  against  particular 
"persons  and  classes,"  said  he,  "especially  such  as  are  of 
"an  unusual  character,  unknown  to  the  practice  of  our 
"government,  might  be  obnoxious  to  the  constitutional 
"prohibition.  It  would,  however,  be  impracticable  and 
"unwise  to  attempt  to  lay  down  any  general  rule  or  defini- 
"tion  on  the  subject  that  would  include  all  cases.  They 
"must  be  decided  as  they  arise."^^® 

SETTLEMENT    OF    CLAIMS. 

In  order  that  the  cost  and  delays  attending  ordinary 
litigation  in  the  courts  shall  not  mar  a  scheme  whose 

"«See  p.  83. 

^'^'''Law  and  Opinion  in  England,  p.  283. 

i^sBell's  Gap.  E.  v.  Pennsylvania,  134  U.  S.,  23Y. 


119 

value  largely  depends  upon  cheap  and  prompt  relief, 
the  foreign  laws  generally  provide  for  the  settlement  of 
disputed  claims  a  more  or  less  summary  procedure  as 
distinguished  from  the  ordinary  court  proceedings.  ^"^^ 
As  every  disputed  claim  necessitates  a  formal  ad- 
judication of  rights,  and  every  claim  approved  involves 
a  compulsory  transfer  of  money — property — from  one 
person  to  another,  we  inquire  whether  or  how  far  a 
summary  procedure  will  conform  to  our  constitutional 
law. 


Premising  that  "due  process  of  law"  will  in  this  rela-  Due  process 
tion  obtain  where  the  disputants  have  opportunity 
to  appear  before  an  impartial  tribunal  let  us  consider 
the  bearings  of  our  constitutional  requirement  of  trial 
by  jury  and  of  our  constitutional  rule  that  judicial 
functions  shall  be  performed  by  a  judicial,  as  distin- 
guished from  a  ministerial  body. 


Several  forms  of  procedure  enacted  or  proposed  dis- 
close different  views. 

The  Montana  and  the  Maryland  acts^^^  not  only  dis- 
pense with  a  jury,  but  the  one  authorizes  the  state  au- 
ditor and  the  other  county  officials  to  pay  all  claims  and 
settle  all  controversies. 

The  New  York  Act  refers  all  disputes  to  an  action  at  n.  y.  Act. 
law.  "Under  our  Constitution,"  says  the  Employers' 
Liability  Commission  in  its  Keport,  "the  courts  cannot 
be  deprived  of  jurisdiction  of  industrial  disputes.  While 
we  deplore  law  suits  over  industrial  accidents,  we  realize 
that  they  must  occur,  and,  after  a  great  deal  of  consider- 
ation, w^e  have  determined  that  any  disputes  under  the 
proposed  statute  had  best  be  litigated  in  the  courts'' 
"It  was  impossible,  in  view  of  the  constitutional  pro- 

iT»See  p.  29. 
"oSee  pp.  77,  80. 


120 


Minnesota 
Commission. 


Sdbath  Bill. 


Franklin  v.  R. 


visions  to  eliminate  the  jury  trial  from  the  compulsory 
bill.181 

The  Minnesota  Employees'  Compensation  Commission 
presents  for  discussion  a  compensation  bill  which  would 
impose  responsibility  upon  the  employer  "on  the  condi- 
tion precedent  only,  that  in  case  of  dispute  as  to  the 
amount,"  etc.,  the  employee  or  his  representatives  "shall 
comply  with  the  provisions  of  this  act,"  and  significant 
provisions  relieve  the  employer  from  all  liability  for  in- 
juries covered  by  the  bill  except  by  the  procedure  pro- 
vided therein,  and  create  a  Board  of  Arbitration  and 
Awards  for  the  adjudication  of  all  claims. 

The  Sabath  Bill  in  Congress  creates  a  Federal  Commis- 
sion of  Injury  Awards,  which  shall  take  all  proceedings 
to  effectuate  the  act  and,  if  a  claimant  object  to  its  award, 
the  Commission  shall  bring  an  action  in  the  nature  of  a 
bill  of  review  in  a  circuit  court.  In  case  an  employer  fails 
to  comply  with  an  order  of  the  Commission  it  may  apply 
by  petition  in  a  summary  way  to  a  circuit  court,  which 
sliall  hear  and  determine  the  matter  as  a  court  of  equity, 
speedily  and  without  the  formalities  incident  to  ordinary 
suits. 

In  connection  with  these  plans  a  quotation  from  our 
first  judicial  opinion  dealing  with  the  general  subject  is 
of  interest.  The  Maryland  Co-operative  Insurance  Fund 
of  1902,^^2  already  cited,  was  held  unconstitutional  by  the 
Baltimore  Court  of  Common  Pleas — the  court  say- 
ing: "For  the  handling  and  disbursement  of  this 
"entire  fund  ^plenary  power'  was  lodged  in  the  hands  of 
"the  insurance  commissioner,  thus  investing  him  with 
"judicial  or  quasi-judicial  power,  and  that  without  any 
"provision  for  a  trial  by  jury,  or  any  right  of  appeal  from 
"his  conclusions.  Had  the  act  stopped  here,  it  might  well 
"have  been  argued  that  inasmuch  as  it  provided  for  a 
"fund  for  the  benefit  of  certain  widows  and  orphans  who 

isiPp.  55,  65. 
•i82See  p.  86. 


121 

"would  otherwise  be  remediless,  it  was  within  the  power 
"of  the  legislature  to  place  the  administration  of  that 
"fund  in  the  hands  of  such  officials  as  it  might  see  fit. 
"But  the  act  did  not  stop  with  the  provisions  already  re- 
"ferred  to,  but  also  embraced  cases  where  the  death  had 
"been  caused  by  the  negligence  of  the  employer;  cases 
"where  there  would  be  a  clear  right  of  action  in  the 
"courts  under  existing  law.  It  also  enacted  that  the  em- 
"ployers  who  made  the  payments  provided  in  the  act 
"should  by  such  payments  be  exempted  from  further  lia- 
"bility. 

"The  effect  of  the  act  was,  therefore,  not  only  to  vest 
"in  the  insurance  commissioner  powers  and  functions  es- 
"sentially  judicial  in  their  character,  but  to  take  away 
"from  citizens  a  legal  right  which  they  had  theretofore 
"enjoyed,  and  which  could  be  enforced  by  them  in  the 
"courts,  and  also  to  deny  to  them  the  right  to  have  their 
"cases  heard  before  a  jury.  It  is  only  necessary  to  clearly 
"understand  the  provisions  of  this  act  to  see  that  they  are 
"in  direct  conflict  with  several  of  the  provisions  of  the 
"constitution  of  the  State.  Thus,  article  5  of  the  declara- 
"tion  of  rights  assures  to  the  people  the  right  of  a  trial 
"by  jury.  Article  19  gives  to  every  one  for  injury  done 
"to  him  in  his  person  or  property  a  remedy  by  the  course 
"of  the  law  of  the  land.  Yet  both  of  these  guarantees  are 
"completely  ignored  by  the  act  in  question. 

"Without  prolonging  the  matter,  therefore,  it  is  so 

"clearly  evident  that  the  act  in  question  is  framed  in  total 

"disregard  of  the  provisions  of  the  constitution  that  the 

"act  must  be  declared  void,  and  the  demurrer  sus- 
"tained."i«3 

If,  contrary  to  the  admirable  practice  in  other  coun- jury  trial, 
tries,  trial  by  jury  must  be  attached  to  American  com- 
pensation schemes  their  value  will  be  sensibly  dimin- 
ished.   Indeed,  if  the  phrasing  of  the  New  York  statute 

i83Franklin  v.  United  Eys.  Co.,  87  Md.,  684. 

or  THE 

^nive:rsity 

or 


122 

— "any  question  which  may  arise  under  this  act"  not  de- 
termined by  agreement  "shall  be  determined  by  an  ac- 
tion at  law  as  herein  provided,"  is  really  compelled  by 
the  law  of  the  constitution,  the  virtues  of  systematic 
compensation  may  be  seriously  compromised. 

Only  in  case  it  shall  be  held  that  a  compensation 
scheme  may  dispense  with  trial  by  jury  will  the  status 
Arbitration,  of  its  alternative — the  arbitral  tribunal — be  of  interest. 
This  tribunal,  if  not  a  distinctively  judicial  body,  must 
be,  at  least,  competent  to  exercise  a  sufficient  judicial 
power  consistently  with  the  prohibition  against  an  im- 
proper joinder  of  judicial  and  ministerial  functions. 

The  courts  broadly  agree  upon  this  principle  of  classi- 
fication— On  the  one  hand  a  ministerial  officer  may  not 
be  vested  with  judicial  power  in  a  matter  having  no 
close  or  proper  relation  to  his  normal  functions.  On 
the  other  hand,  we  find  a  recognition  of  bodies  which  com- 
bine judicial  with  ministerial  functions,  especially  where 
they  are  created  for  a  particular  work. 

According  to  the  principle  of  classification  the  state 
auditor  designated  by  the  Montana  Act  would  seem  to 
be  an  improper  depositary  of  judicial  power,  the  com- 
mission created  by  the  Sabath  Bill  a  proper  one. 

Whether  or  not  a  compensation  act  may  provide  a 
summary  procedure  will  in  each  jurisdiction, — federal 
and  state — depend,  in  the  last  analysis,  upon  the  con- 
struction placed  by  the  governing  courts  upon  the  jury 
provisions  of  the  governing  constitution,  for,  be  it  noted, 
the  "due  process  of  law"  of  the  Fifth  and  Fourteenth 
Amendments  does  not  require  a  jury  trial.^^* 

It  must  be  understood,  however,  that  in  whatever 
States  the  legislatures  are  forbidden  to  take  away  trial 
by  jury  in  any  class  of  cases  where  it  has  once  obtained, 

is^Montana  Co.  v.  St.  Louis  Co.,  152  U.  S.,  171. 


123 

tliey  cannot,  in  framing  a  compensation  scheme,  deny 
an  injured  workman  his  "day  in  court" — cannot  make  the 
claim  for  compensation  the  exclusive  remedy  in  point  as  to  exciu- 

^j!  1^^,  sion  of  suits 

of  law.  at  law. 

Yet  the  legislature  may  do  something  toward  mak- 
ing a  claim  preferred  in  fact  by  compelling  a  workman  to 
choose  between  the  comparative  certainty  of  a  claim  and 
the  lottery  of  an  action.  The  presentation  of  a  claim  should 
be  made  a  waiver  of  action.  The  bringing  of  an  action, 
a  waiver  of  claim.  This  proper  provision  is  embodied 
in  the  New  York  Act.^^^  The  Sabath  Bill,  however,  fol- 
lows the  British  Act  in  allowing  a  suitor  who  fails  to 
recover  damages  to  have  compensation  assessed  by  the 
court  if  the  injury  be  covered  by  the  compensation  law\ 

The  legislature  may  do  much  more  in  this  direc- 
tion. Wherever  actions  for  damages  have  been  en- 
couraged by  an  enlargement  of  employers  liability,  they 
should  be  correspondingly  discouraged  by  repealing  them 
in  the  case  of  workmen  who  are  embraced  in  a  compensa- 
tion scheme. 

Furthermore,  the  legislature  should  so  exert  its  power 
over  litigation  as  to  restrict  the  recovery  of  damages  to 
cases  where  the  master  is  so  grossly  in  fault  as  to  make 
punitive  damages  desirable.  ^^®  In  this  way  we  may,  in 
effect,  largely  assimilate  an  admirable  feature  of  some 
of  the  foreign  laws.^^^ 

INTERNATIONAL   AND  INTERSTATE  QUESTIONS. 

The  international  and  interstate  bearings^  of  a  com- 
pensation scheme  seem,  as  yet,  to  have  attracted  but  little 
attention  in  this  country. 

We     may    anticipate    that    American    compensation  ^lien  work- 
schemes  will,  generally  speaking,  accord  to  alien  work-  S^pioyers. 

i85See  p.  77. 
i8«See  p.  134. 
isfSee  p.  24. 


124: 

men  within  the  jurisdiction  the  same  consideration  so 
generally  accorded  in  the  foreign  laws.^^^ 

Regarding  the  dependents,  residing  abroad,  of  an 
alien  workman  accidently  killed  here  we  should  antici- 
pate a  reasonable  recognition  of  their  claim  to  compensa- 
tion, especially  where  their  own  country  has  adopted  an 
equally  liberal  policy. 

Alien  employers  within  our  jurisdiction  will,  of 
course,  be  subject  to  a  compensation  scheme,  and  if  the 
nature  of  their  work  renders  the  giving  of  security  ad- 
visable it  may  be  prescribed  here  as  it  is  in  some  of  the 
foreign  laws.^^^ 


The  relation  of  the  several  States  to  each  other,  the 
national  ramifications  of  many  of  our  leading  industries 
and  the  interstate  movement  of  employers  and  employees 
give  rise  to  interesting  questions. 
Interstate  A  few  years  ago   a   Massachusetts  commission   re- 

ported against  a  compensation  law  that  the  industries  of 
a  State  taking  the  lead  would  immediately  suffer  from  the 
competition  of  rivals  in  other  States.  This  objection 
has  no  force  in  respect  of  industries  which  do  not  seek 
the  general  market  but  serve  local  needs.  When,  how- 
ever, keenly  competitive  industries  are  involved  the  ob- 
jection is  forceful  enough  to  warn  a  pioneer  State  from 
enacting  a  law  that  will  substantially  add  to  the  cost  of 
production. 

The  New  York  legislature  has  emphasized  this  dis- 
tinction by  passing  a  compulsory  law  for  what  it  assumes 
are  non-competitive  industries  and  a  voluntary  law  for 
supposedly  competitive  ones.  It  remains  to  be  seen,  how- 
ever, whether  this  classification  is  valid  in  law,  for  if  it 
be  valid  the  employees  in  certain  conspicuously  danger- 

i88See  p.  46. 
"»See  p.  45. 


competition. 


125 

ous  trades  may  be  forever  barred  from  compensation, 
since  a  beginning  must  be  made  somewliere. 

We  shall  presently  see  that  a  pioneer  rate  of  compen- 
sation should  be  moderate  where  great  industries  are 
first  singled  out  in  order  to  permit  the  later  inclusion  of 
smaller  ones,^^*^  and  in  competitive  conditions  we  perceive 
another  reason  for  moderation. 

As  "the  citizens  of  each  State  are  entitled  to  the  Migratory 
privileges  and  immunities  of  citizens  of  the  several  empiSt?s^^ 
States"  it  follows  that  a  workman  who  shall  come  tem- 
porarily into  a  State  having  a  compensation  scheme  is 
entitled  to  its  benefits  if  he  be  within  its  classification, 
though  his  own  State,  having  no  scheme,  offers  no  re- 
ciprocal advantage. 

The  position  of  an  accident  pensioner  who  leaves  the 
State  and  of  the  non-resident  dependents  of  a  workman 
killed  therein  will  depend  wholly  upon  the  statute.  The 
pension  of  the  former  may  be  cut  off,  or  it  may  be  con- 
tinued, suspended  or  commuted,  and  the  dependents  may 
be  compensated  or  not  at  discretion. 

Turning  to  the  employers,  we  find  that  when  these  are 
individuals  or  partnerships  they,  like  the  workmen,  are 
entitled  to  enter  a  State  with  full  privileges  and  im- 
munities, though  there  may  be  cases  where  requirement 
of  a  guarantee  fund  will  not  be  unreasonable. 

When  the  employers  carrving  on  industry  beyond  the  undertakings 

•*■       *^  k        o  ./  t/  jj^  several 

home  State  are  corporations  our  system  of  state  corpora-  states. 
tions  with  national  activities  suggests  some  interesting 
questions. 

These  corporations  are  not  citizens  of  a  State  within 
the  meaning  of  the  constitutional  provision  just  cited. 
They  may  do  business  in  another  State  only  by  the  lat- 
ter's  permission  which  is,  in  some  cases,  expressed  by 

i8<>See  p.  126. 


126 

statute,  but  generally  implied  by  absence  of  statutory 
prohibition. 

As  a  matter  of  fact,  practically  all  corporations 
likely  to  be  embraced  in  a  compensation  law  are  able  to 
do  business  anywhere,  and  are  not  likely  to  be  seriously 
prejudiced.  Corporations  whose  business  requires  the 
acquisition  of  a  local  charter  become  for  the  purpose  of 
a  compensation  law  local  corporations.  As  to  the  others, 
beyond  the  requirement  of  security  for  compensation 
when  this  would  be  reasonable  in  the  case  of  individuals, 
it  is  not  perceived  how  they  could  be  subjected  to  sub- 
stantial discrimination.  Certainly  no  greater  compensa- 
tion could  be  exacted  from  them,  if  only  for  the  reason 
that  this  would  unlawfully  prefer  one  class  of  workmen 
over  another. 

THE  COMPENSATION  RATE. 

An  initial  compensation  law  will  probably  select  cer- 
tain industries  whose  hazards  are  widely  advertised,  and 
whose  workmen  belong  to  influential  trade  unions. 

As  in  these  industries  will  be  found  many  establish- 
ments representing  large  concentrations  of  capital  a 
markedly  liberal  compensation  may  be  advocated.  But 
Initial  rate.  ^^  should  be  clcarly  understood  that  an  initial  rate  must 
be  fixed,  not  only  in  regard  to  all  the  establishments  af- 
fected, but  in  anticipation  of  the  ultimate  extension  of 
the  scheme  to  industries  in  general,  if  not  even  to  do- 
mestic service,  as  in  Great  Britain. 

For  example,  accidents  to  farm  hands  attract  but  little 
attention.  Few  States,  if  any,  require  them  to  be  reported. 
Yet  agriculture  is  wholly,  or  on  its  mechanical  side,  cov- 
ered in  important  foreign  systems,^ ^^  and  should  not  be 
permanently  ignored  here.  Indeed,  the  Wisconsin  Labor 
Bureau  has  already  made  some  inquiry  into  accidents  in 
agriculture,  and  reports  for  1907,  293  accidents  to  farm 

i»iSee  p.  17. 


127 

hands,  and  684  to  independent  farmers.  This  means  that 
agricultural  employment  shows  977  casualties — ranking 
in  respect  of  mere  numbers  next  to  railway  employment 
with  1,305.^»2 

If  to-day  the  railroad  company  be  obliged  to  compen- 
sate the  brakeman,  to-morrow  the  farmer  may  have  to  do 
the  like  for  his  laborer.^ ^^  And  the  company  and  the 
farmer  will  have  to  pay  on  the  same  basis  for  one  of  the 
fixed  points  of  compensation  schemes  is  that  they  shall 
operate  equally  and  uniformly  in  respect  of  all  workmen 
included,  and  not  unequally  and  discriminately  according 
to  the  occupation  or  financial  position  of  the  employer.^  ^* 

The  history  of  pension  legislation  teaches  that  if  there 
be  any  alteration  in  the  original  rate  we  should  expect  an 
increase  rather  than  a  reduction,  so  on  all  accounts  we 
are  well  advised  that  an  initial  rate  should,  as  a  matter  of  Moderate 
policy,  be  moderate. 

But  a  moderate  rate  is  not  only  commended  by  policy. 
It  is  dictated  by  the  law  of  the  constitution  which  forbids 
spoliation  under  forms  of  law. 

If  the  master  can  be  made  responsible  for  injuries  be- 
yond his  fault  his  burden  must  be,  at  least,  a  reasonable 
and  not  an  exorbitant  one. 

Now  we  have  shown  that  the  compensation  rate  must 
be  uniform  for  all  workmen,  in  order  to  assure  to  every 
one  the  equal  protection  of  the  laws.  This  quality  of 
benefit  for  workmen  involves  an  inequality  of  burden  for 
employers,  who,  rich  and  poor  alike,  must  pay  the  same 
proportional  rate.  And  an  unequal  incidence  of  burden 
may  occur  in  other  ways.  A,  employing  fifty  workmen  in  a 
dangerous  trade,  is  subject  to  a  far  heavier  risk  at  $2,000 
death  compensation  than  B,  who  employs  a  thousand  in  a 
safe  one,  would  incur  at  $4,000.    C,  with  a  dozen  plants, 

i»2Rep.  Wisconsin  Bureau  of  Labor,  1908,  p.  24. 
"3See  p.  100. 
"*See  p.  111. 


128 

might  weather  a  catastrophe,  whose  resulting  liabilities 
would  bankrupt  D,  were  his  single  plant  destroyed. 

While  I  do  not  assert  that  the  unavoidable  inequality 
of  burden  would  necessarily  amount  to  a  denial  of  "equal 
protection/'  and  thus  block  any  comprehensive  scheme, 
I  do  insist  that  a  compensation  figure  based  upon  the 
ability  of  well-to-do  employers,  or  of  great  industries, 
would  work  an  unlawful  discrimination  against  their 
weaker  associates.  All  employers  would  not  "be  treated 
alike  under  substantially  similar  conditions." 

The  "moderate"  rate  may  be  broadly  described  as  one 
which  each  and  every  industry  or  employer  within  the 
actual  or  the  potential  purview  of  a  compensation  scheme 
may  be  lawfully  required  to  bear — a  rate  imposed  on  the 
railway  company  to-day  must  be  one  which  can  later  be 
laid  upon  the  small  manufacturer. 

GENERAL    CONCLUSIONS    AS    TO    LEGISLATIVE    POWER   IN 
RESPECT  OF  COMPULSORY  COMPENSATION. 

Absolute  Dismissing  state  accident  insurance  as  not,  at  present, 

in  question,  and  considering  compensation  at  the  em- 
ployer's charge,  I  am  of  the  opinion  that  he  cannot 
be  affected  with  an  absolute  liability  and  a  fixed 
indemnity  for  all  industrial  accidents.  If  the  courts 
shall  decide  otherwise  (and  I  remark  in  passing  that  a 
denial  of  legislative  power  in  a  few  States  would  tend  to 
check  its  application  to  competitive  industries  in  neigh- 
bor States),  they  must,  I  think,  enunciate  a  new  principle 
broad  enough  to  draw  contributions  from  workmen,  if  this 
shall  be  expedient.  If  the  employer  may  be  required  to 
help  the  workman,  the  workman  may  be  required  to  help 
himself,  and  so  far  as  the  cost  is  shifted  to  the  public,  the 
workman  is  as  likely  to  be  recouped  by  higher  wages  as  is 
the  employer  by  higher  prices. 

Assuming  for  the  sake  of  argument  that  the  principle 
of  compulsory  compensation  shall  be  substantially  af- 
firmed  we  pass  to  several  ancillary  matters. 


129 

A  compulsory  rule  need  not  be  applied  immediately,  General 
or  ever,  to  all  employments;  but  it  must  be,  potentially, 
applicable  to  all.  No  employment  can  plead  constitutional 
exemption  because  of  its  relative  freedom  from  danger — 
the  "dangerous  trades"  are  not  alone  subject  to  the  obliga- 
tion. No  employer  can  plead  exemption  because  of  his 
pettiness — the  obligation  is  imposable  upon  rich  and  poor 
alike. 


To  assure  the  "equal  protection  of  the  laws,'^  the  Equality. 
rule  must  be  applied  impartially,  and  while  this  man- 
date allows  reasonable  classification  respecting  the  in- 
clusion and  omission  of  employments,  it  exacts  an  uni- 
form basis  for  computing  compensation,  if  only  that  no 
set  of  workmen  shall  be  arbitrarily  preferred  above  an- 
other— that  is  to  say,  the  locomotive  engineer,  if  the  basis 
is  the  wage  scale,  must  not  be  paid  at  a  higher  rate  than 
the  farmhand,  though  his  higher  wages  will  give  him  a 
larger  sum ;  if  specific  sums  be  prescribed  for  specific  in- 
juries, his  lost  leg  cannot  be  valued  higher  than  the  farm- 
hand's. 

The  compensation  rate  must  be  moderate  and  not  Moderate 
confiscatory,  and  since  all  employers  may  ultimately  be  '^^  ^' 
gathered  in,  and  since  the  rate  basis  must  be  uniform,  it 
is  perceived  that  the  incidence  of  an  initial  burden 
should  be  estimated  in  view  of  its  potential  imposition 
upon  all  sorts  and  conditions  of  employers,  and  not  sim- 
ply by  the  standing  of  those  at  first  affected. 

In  planning  the  administration  of  a  compensation  Association- 
law  we  must  reject,  as  unconstitutional,  the  compulsory  '''^"'"^°^®' 
association  of  employers.     Instead  of  the  collective  re- 
sponsibility of  the  German  system,  we  must  impose  the 
individual  responsibility  of  the  British  system,  though 
we  should  improve  upon  this  by  allowing  responsibility  to 


130 


be  shifted  by  insuring  in  an  approved  company  or  volun- 
tary association,  as  is  the  rule  in  France. 


Arbitration. 


Complex 
administra- 
tion. 


There  is  reason  to  fear  that  in  many,  if  not  most, 
of  our  States,  the  summary  procedure  so  essential  to  the 
useful  operation  of  a  compensation  law  will  be  embar- 
assed  by  an  indefeasible  right  to  trial  by  jury,  with  its 
inevitable  delay,  expense  and  uncertainty. 

The  simple  motive  of  a  compulsory  compensation 
scheme  cannot  be  simply  effectuated.  Complexity  is  its 
dominant  note,  and  it  should  be  observed  in  passing  that 
the  New  York  and,  more  markedly,  the  Montana  and  the 
Maryland  legislatures  have,  in  straining  for  simplicity  of 
procedure,  but  drawn  attention  to  the  insistent  com- 
plexities they  would  fain  ignore. 

Every  one  of  the  many  accidents  covered  in  a  separate 
"case,"  and  while  each  is  in  many  ways  happily  differ- 
entiated from  a  damage  suit,  they  form  collectively  a  vast 
congeries  of  small  affairs  which  must  be  administered 
with  judgment  and  precision.  Each  accident  must  be 
proven  and,  what  is  often  a  matter  for  medical  experts, 
its  degree  established.  The  compensation  awarded  in 
due  form  ought,  in  many  cases,  to  be  thereafter  doled  out 
to  the  beneficiary,  and  a  change  in  condition  for  better 
or  worse  may  require  the  amount  to  be  lowered  or 
raised. 

In  short  the  simplest  compensation  scheme  of  real 
value  implies  a  particular  attention  to  petty  details  and, 
as  we  cannot  adopt  the  German  plan  of  casting  these 
upon  associated  employers,  we  must  invoke  a  substantial 
measure  of  official  intervention. 


Review. 


Reviewing  the  foregoing  points,  we  perceive  that  even 
if  the  legislature  may  lawfully  decree  the  naked  prin- 
ciple of  compulsory  compensation,  the  practice  is  likely 
to  be    sufficiently    embarrassed    by    constitutional    re- 


181 


straints  and  directions  to  preclude  the  adoption  of  a 
thoroughly  satisfactory  scheme. 

IV. 

VOLUNTARY   COMPENSATION. 

GOVERNMENT  ESTABLISHMENTS. 

An  American  government  may  grant  accident  com- 
pensation to  its  servants.  In  so  doing  it  acts  like 
a  private  employer  who  voluntarily  assumes  a  similar 
charge  in  respect  of  his  employees.  And  on  this  line  Con- 
gress lately  passed  a  law  providing  that  federal  artisans 
or  laborers,  injured  in  the  course  of  their  work  through  no 
negligence  or  misconduct  of  their  own,  shall  receive  reg- 
ular pay  for  such  part  of  a  year  as  incapacity  shall  last, 
and  in  case  of  fatality  the  pay  shall  go  to  the  depend- 
ents.^»« 

Government  aid  to  its  employees  is  too  remote  from 
our  subject  to  receive  extended  consideration  here,  but 
one  point  should  be  noticed.  The  recent  attempt  of  the 
General  Confederation  of  Labor  to  paralyze  France  by 
a  strike  of  public  servants  warns  us  against  any  scheme 
of  aid  which,  even  if  it  should  include  employees'  con- 
tributions, shall  give  to  a  public  servant  any  ground  for 
asserting  anything  like  a  property  right  in  his  office.  In 
this  relation  the  New  York  State  Civil  Service  Commis- 
sion, in  its  report  for  1910,  says :  "Any  property  right  in 
a  fund  attached  to  the  public  service  would  tend  unrea- 
sonably to  hamper  that  power  [to  remove  for  reasonable 
cause],  and  to  put  the  administration  of  the  public 
service  at  the  mercy  of  organized  public  servants."^^^ 

PRIVATE  ESTABLISHMENTS. 

If  the  compulsory  principle  of  the  foreign  compensa- 
tion schemes  be,  as  I  maintain,  repugnant  to  our  institu- 

lo'May  30,  1908. 
i»«P.   31. 


182 

tions  we  may,  nevertheless,  accomplish,  by  voluntary 
methods,  a  substantial  measure  of  systematic  compensa- 
tion. 


Insurance 

companies, 

etc. 


Private  organizations — companies,  societies  and  unions 
— may  yet  develop  the  will  and  the  ability  to  proffer  a 
sound  and  cheap  accident  insurance,  but  we  leave  these 
organizations  to  define  their  position  in  their  own  time 
and  way.  Our  concern  is  with  systematic  compensation 
at  the  employer's  instance. 


Employers' 
plans. 


Voluntary  accident  relief  has  already  made  fair  prog- 
ress. Besides  a  widespread  proffer  of  medical  and  hos- 
pital service  to  injured  workmen  we  mark  a  number  of 
schemes  founded  by  employers  to  provide  accident  in- 
demnity alone  or  in  conjunction  with  sickness  or  old  age 
relief.  Some  involve  workmen's  contributions.  In  others 
the  employer  bears  the  whole  cost,  and  among  these  tlie 
most  notable  of  the  purely  accident  schemes  are  those 
recently  formulated  by  the  Steel  Corporation  and  the 
International  Harvester  Company. 


To  the  objection  that  few  employers  are  likely  to  make 
a  free-will  offering  to  their  employees  I  reply  that  the 
voluntary  method  I  have  in  mind  would  not  be  inspired 
by  philanthropy  though  by  no  means  lacking  the  humane 
spirit.  It  would  be  grounded  in  the  proven  fact  that 
there  are  industries  and  establishments  which  can  be 
made  to  bear  a  reasonable  share  of  the  cost  of  their  ac- 
cidents with  benefit  to  all  concerned.  It  would  be  facili- 
tated by  the  marked  ability  of  the  modern  business  organ- 
ization to  co-ordinate  and  administer  a  great  number  of 
petty  affairs. 

Most  significantly,  the  legislature  may,  by  a  tactful  ex- 
ercise of  power  over  the  conduct  and  effect  of  litigation, 
persuade  many  employers  to  the  voluntary  method. 


133 

While  the  legislature  cannot,  in  my  opinion,  strip  the  Legislative 
master  of  all  defences  to  a  suit  for  damages^  ^^  it  may  so  ment. 
narrow  them  as  to  encourage  the  bringing  of  suits  with 
their    inevitable    delays,    uncertainties,    irritations    and 
waste.  ^^^ 

The  mere  holding  of  this  power  in  leash  suggests  a 
special  motive  for  employers  to  volunteer  compensation 
schemes  in  the  hope  thereby  of  discouraging  its  exercise, 
but  assuming  that  the  legislature  should  wish  actively  to 
encourage  such  schemes  these  questions  arise.  Shall  it 
attempt  to  drive  employers  to  voluntary  compensation  by 
laying  heavy  liabilities  by  way  of  suit  upon  those  who 
shall  not  adopt  it?  Or  shall  it  persuade  them  by  lighten- 
ing the  liability  of  those  who  shall  adopt  it? 


The  New  York  legislature  is  experimenting  with  the  n.  y.  Act 
first  alternative  by  a  law  framed  on  the  main  lines  of  a 
bill  presented  by  the  Employer's  Liability  Commission 
as  a  "voluntary"  compensation  scheme.^^^ 

The  act  provides  that  where  an  employer  and  an  em- 
ployee shall  have  agreed  to  a  plan  whereby  the  former 
shall  pay  scheduled  compensation  for  all  accidents  ex- 
cepting those  due  to  the  victim's  "serious  and  wilful  mis- 
conduct" (that  is  to  say  the  plan  prescribed  by  the  "com- 
pulsory" compensation  law)  the  latter  shall  have  no 
other  remedy  save  the  action  for  compensation  therein 
provided.  Where  the  plan  is  not  thus  agreed  to  the  em- 
ployer remains  subject  to  all  common  law  and  statutory 
liabilities.  These  last  are  somewhat  enlarged  in  this  ex- 
perimental act  and  we  may  assume  that  the  greater  the 
enlargement  the  more  strongly  would  the  employer  be 
pressed  to  promote  a  voluntary  plan. 

The  New  York  act  does  not,  from  the  employer's 
standpoint,  contemplate  a  really  "voluntary"  plan  for 

is^See  p.  10. 
losSee  pp.  7-9. 
10^1910,  c.  352. 


134 

none  may  be  even  started  without  the  workman^s  con- 
sent. More  importantly  an  agreement  made  may  be 
broken  by  the  workman.  While  the  workman  is,  in  sign- 
ing an  agreement,  supposed  to  waive  his  right  of  action, 
except  in  case  of  the  master^s  gross  fault,  he  may,  unless 
he  has  actually  accepted  compensation,  maintain  an  ac- 
tion at  will,  but  the  commencement  of  action  bars  him 
from  all  benefit  under  the  plan. 

The  upshot  is  that  an  employer  may,  if  the  workman 

consents,  promote,  at  his  own  cost,  a  compensation  plan ; 

V  then,  if  an  injured  workman  does  not  recall  his  consent 

by  suing  for  damages,  the  employer  may  acquit  himself 

by  paying  compensation. 

The  Act  has  been  in  effect  over  two  months  but  thus 
far  it  seems  to  be  practically  a  dead  letter. 

A  dead  letter  also  is  a  recent  law  of  Massachusetts 
authorizing  employers  to  formulate  workmen's  compen- 
sation plans  subject  to  the  approval  of  the  State  Board 
of  Conciliation  and  Arbitration.^oo  it  is  provided  that 
compensation  shall  be  based  upon  a  percentage  of  average 
earnings  and  shall  be  paid  without  reference  to  liability 
at  common  law  or  under  the  employers'  liability  act. 
While  assent  to  the  plan  shall  not  be  made  a  condition 
of  employment,  the  act  says  that  a  workman  may,  by  sign- 
ing an  agreement,  release  the  employer  from  other  lia- 
bility for  one  year,  but,  as  the  release  is  voidable,  the  act 
offers  hardly  more  than  an  official  stamp  upon  an  ar- 
rangement which  may  be  made  privately. 

Promotion  of  Voluutary  compensation  may,  I  believe,  be  substan- 

meufod.^^  tially  promoted  if  the  legislature  shall  discard  the  idea  of 
threatening  employers  with  more  litigation  if  they  re- 
ject it  and  hold  out,  instead,  the  promise  of  less  litigation 
if  they  embrace  it.  And  we  derive  the  principle  of  per- 
suasive legislation  from  a  rule  embodied  in  the  best  of 
the  foreign  laws — the  master  who  is  bound  to  systematic 

2001909.  c.  489. 


185 

compensation  is  relieved  from  all  liability  in  suit  except 
when  the  accident  is  due  to  his  culpable  act  or  neglect.^^^* 
This  is  the  complement  of  the  general  rule  that  a  work- 
man shall  not  have  compensation  for  an  accident  due  to 
his  wilful  act.  In  other  words,  as  the  workman  is  denied 
compensation  only  when  his  fault  is  conspicuous  so  he 
should  get  super-compensation — damages — only  when  the 
master's  fault  is  conspicuous. 

The  absolute  fairness  of  this  position  is  evident  to  all 
who  are  not  bemused  by  the  notion  that  continued  sub- 
jection to  damage  suits  somehow  tends  to  make  the  mas- 
ter more  careful  and  somehow  maintains  the  dignity  of 
the  workman,  but  such  persons  have  really  no  business 
to  advocate  systematic  compensation  at  all,  for  if  this  is 
not  better  than  the  lottery  of  litigation  it  should  be  re- 
jected. If  it  is  better  it  should  discourage  litigation 
except  when  public  policy  commends  this  for  the  punish- 
ing of  culpable  masters. 

As  the  legislature  may  restrict  a  master's  defences 
to  an  action  for  damages  provided  it  shall  not  leave  him 
substantially  defenceless^^^  so  it  may  enlarge  his  defences 
provided  it  shall  not  make  him  substantially  immune. 
In  this  enlargement  we  find  the  basis  of  a  persuasive  law. 

Let  the  legislature  declare  that  an  employer  who  has, 
by  a  proper  plan,  obligated  himself  to  pay  compensation 
for  all  accidents  shall  be  liable  in  damages  only  when 
an  accident  is  the  result  of  his  culpable  act  or  neglect, 
and  that  the  mere  institution  of  a  suit  shall  bar  all  claim 
to  compensation. 

This  declaration  should  so  discourage  suits  in  all  ex- 
cept flagrant  cases  as  to  offer  a  strong  inducement  for  the 
voluntary  plan. 

Conceding  that  this  plan  would  in  its  best  showing 
leave  out  a  fraction  of  workmen  whom  compulsion  would 
have  covered  (if  I  have  rightly  estimated  the  inducement 

2ooaSee  p.  24. 
2oiSee  p.  10. 


136 

the  fraction  would  not  be  large),  the  community  might 
well  be  gratified  with  a  great  achievement,  and  the  frac- 
tion would  be  no  worse  off  than  the  tens  of  thousands  of 
emplo^^ees  who  are  not,  as  a  rule,  included  in  current 
compulsory  proposals. 

Advantage  of  Evcu  if  a  legislature  shall  be  free  to  compel  systematic 

method.  compensation,   it  should   prefer  the  voluntary   method 

which,  with  compulsory  power  in  reserve,  might  be  more 
widely  commended  to  employers.  For,  all  things  con- 
sidered, it  will  appear  that  this  method  is  the  better  one. 
It  will  be  objected  that  compulsion  would  gather  in 
more  employers  than  would  persuasion,  even  with  the 
threat  of  force  behind  it;  but  there  is  every  reason  to 
believe  that  a  successful  initiation  of  the  voluntary 
method  would  promote  its  extension  especially  among 
the  so-called  "dangerous  trades,'^  which  are  the  con- 
spicuous objects  of  systematic  compensation. 

It  will  be  objected  that  employers  would  accord  a 
lower  compensation  than  the  state  would  impose ;  but  the 
voluntary  rates  must  conform  to  a  standard  approved 
by  the  public  authorities.  This  standard  would  require 
reasonable  compensation  as  an  invariable  but,  as  we 
shall  presently  see,  not  necessarily  the  only  factor  in  a 
scheme. 

We  may  concede,  however,  that  did  these  objections 
really  dominate  the  whole  problem,  a  legislature,  had  it 
the  power  of  choice,  might  choose  compulsion,  but  they 
are  outweighed  by  the  positive  advantages  of  the  vol- 
untary method. 

Among  the  industries  commonly  suggested  for  sys- 
tematic compensation,  some  are  located  in  all  the  States, 
others  in  many  of  them,  and  a  number  of  single  establish- 
ments operate  in  several  States.  For  these  the  volun- 
tary method  promises,  in  various  ways,  a  better  oppor- 
tunity than  the  compulsory. 

It  is,  manifestly,  desirable  that  an  industry,  and  es- 


i 


13T 

pecially  a  single  establishmeiit,  shall  not  be  subjected  to 
divers  compensation  schemes  in  divers  jurisdictions  if 
only  for  the  reason  that  diversity  must  increase  the  dif- 
ficulties and  the  cost  of  administration.  But  uniform 
schemes  as  widely  effective  as  industrial  conditions  would 
commend,  were  they  allowed  free  play,  would  be  nar- 
rowed or  blocked  by  an  extensive  adoption  of  compul- 
sory schemes  among  the  States.  For,  even  assuming  a 
wider  agreement  on  cardinal  points  than  is  likely  to 
obtain,  the  remaining  disagreements  coupled  with  inevi- 
table variations  in  matters  of  detail  would  be  sufficiently 
vexatious. 

While  uniformity  would  not  be  perfectly  assured  by 
the  voluntary  method  it  would  be  greatly  facilitated.  The 
very  simplicity  of  the  basic  law  I  have  suggested — the 
release  of  the  employer  from  all  liability  in  damages  ex- 
cept in  case  of  his  culpable  negligence — should  commend 
its  enactment  in  the  several  States,  and,  while  there 
would  be  more  room  for  differences  in  respect  of  the 
standards  for  a  voluntary  system,  these  should  be  so 
simple  in  comparison  with  the  provisions  of  a  compulsory 
law  as  to  render  a  wide  uniformity  attainable. 

All  voluntary  plans  being  held  to  the  cardinal  re-  Development 

*^     ^  °  of  voluntary 

quirement  of  reasonable  compensation,  each  may,  from  method. 
this  point,  be  developed  according  to  the  best  interests 
of  employers  and  employees  in  the  several  industries  or 
in  particular  establishments.  Here  an  employer  will 
present  a  plan  of  his  own  devising;  there  employer  and 
employees  may  agree  upon  one  embodying  special  and 
mutuiall}^  acceptable  conditions.  In  short,  there  will  be  a 
useful  freedom  of  choice;  and  in  no  specific  direction  will 
this  freedom  be  more  advantageous  than  in  facilitating 
employers'  associations. 

Under  a  voluntary  regime  employers,  whom  the  legis- 
lature cannot  compel  to  unite  in  associations,^^^  ^m  j^g^yg 

202See  p.  107. 


188 

for  associated  effort  not  only  a  better  choice  of  means,  but 
a  broader  field  of  action  than  a  compulsory  regime  would 
afford.  For  the  latter  will  tend  to  divide  and  cramp 
effort  by  state  lines,  while  the  former  should  encourage 
the  operation  of  associations  over  whatever  area  con- 
venience shall  dictate. 

In  reviewing  the  foreign  laws  I  gave  the  largest  space 
to  the  German  employers'  associations  for  the  very  pur- 
pose of  emphasizing  the  main  features  of  a  scheme  whose 
principle  should  be  widely  adopted  because  of  its  broad 
distribution  of  cost  and  its  service  in  the  matter  of  safety 
regulations.  This  encouragement  to  associated  effort  of 
broad  range  is,  in  my  judgment,  one  of  the  strongest 
arguments  for  the  voluntary  method. 

Pensions-  The   frccdom   of   action   assured   by   the   voluntary 

method  is  likely  to  be  of  special  utility  in  view  of  a  ris- 
ing interest  in  workmen's  sick  benefits  and  old  age  pen- 
sions. Influenced  partly  by  the  admirable  workings  of 
existing  benefit  and  pension  systems  and  partly  by  for- 
eign social  insurance  schemes,  there  is  a  growing  impres- 
sion that  accident  has  been  over-emphasized — that  the 
greater,  though  less  tragic,  misfortunes  of  sickness,  in- 
validity and  superannuation  should  be  also  put  in  the 
way  of  systematic  relief. 

Without  discussing  the  state's  ability  to  institute 
general  benefit  and  pension  schemes  wholly  or  partly  at 
the  public  charge  and  considering  these  as  connected  with 
particular  industries  or  establishments,  it  will,  I  think, 
be  agreed  that  neither  master  or  workman  can  be  forced 
to  maintain  them.  Such  schemes  must  be  purely  volun- 
tary and,  though  master  and  workmen  might  be  willing 
to  contribute  to  each  in  agreed  proportions,  the  sickness 
benefit  will,  broadly  speaking,  be  largely  the  concern  of 
the  workman  because  its  moving  cause  affects  him  so 
sharply  while  the  master  may  assume  the  larger  interest 


139 

in  the  pension  because  it  tends  to  encourage  long  and 
efficient  service. 

Now,  the  combining  of  accident,  sickness  and  super- 
annuation relief  under  one  general  system  obviously 
makes  for  homogenous  and  cheap  administration,  and  in 
this  relation  we  remark  the  co-ordination  of  these  things 
in  the  new  Hungarian  law.  It  would,  however,  be 
difficult,  to  say  the  least,  to  combine  a  compulsory  acci- 
dent scheme  with  voluntary  sickness  and  pension  plans. 
Indeed,  it  is  worth  serious  consideration  whether  a  com- 
pulsory compensation  law  would  not  only  discourage  the 
institution  of  new  plans  but  affect  existing  ones.  On  the 
other  hand  a  voluntary  compensation  scheme  could  be 
administered  with  sick  relief  and  pensions  with  advan- 
tage to  all  concerned. 

A  compulsory  scheme  requires  an  intimate  participa- 
tion by  courts,  commissions  or  other  public  bodies,  which 
means  more  red  tape,  delay  and  expense  than  under  the 
voluntary  method.  This  needs  from  the  government  only 
recognition  and  supervision.  For  the  rest  it  assures 
the  handling  of  a  complicated  business  matter  by  a  busi- 
ness organization — an  assurance  quite  as  valuable  from 
a  social,  as  it  is  from  a  business  standpoint,  for  every 
voluntary  arrangement  by  employer  and  employee  equit- 
able in  its  nature  and  executed  in  good  faith  improves 
their  relations. 


140 


GENEEAL  CONCLUSIONS. 

The  number  of  industrial  accidents  in  the  United 
States  and  the  resulting  loss  to  victims  and  their  depend- 
ents are  sufficiently  serious  to  demand  reasonable  meas- 
ures to  lessen  the  one  and — special  concern  of  this  brief — 
to  mitigate  the  other. 

Foreign  experience  demonstrates  the  advantage  of 
moderate  compensation  systematically  given  by  em- 
ployers to  many  victims  over  damages  wrested  from 
them  by  a  few. 

Foreign  experience  demonstrates  the  intrinsic  com- 
plexities of  a  workmen's  accident  compensation  scheme 
and  its  relation  to  other  industrial  problems — notably  the 
greater  problems  of  sickness  and  unemployment. 

Foreign  experience  demonstrates  that  systematic  com- 
pensation does  not,  to  say  the  least,  tend  to  reduce  the 
number  of  accidents,  and  that  the  cost,  while  generally 
on  the  increase,  is  not  as  yet  a  noticeable  burden  on  em- 
ployers as  a  whole,  especially  if  it  be  reasonably  distrib- 
uted by  means  of  insurance,  of  which  the  German  asso- 
ciations afford  the  best  type. 

Foreign  experience  demonstrates  by  persuasive  exam- 
ple the  need  of  deliberation  in  formulating  a  scheme. 
And  each  country,  while  scrutinizing  its  neighbors' 
schemes  and  adopting  or  adapting  this  or  that  feature, 
must  finally  square  its  own  with  local  habits  and 
institutions. 

Compulsory  compensation  is  the  rule  abroad  and, 
assuming  for  the  moment  that  it  can  be  constitutionally 
enforced  here,  we  emphasize  several  features  essential 
to  a  just  scheme. 

A  compensation  rate  that  shall  be  both  fair  to  the 
workmen  and  reasonable,  not  only  for  the  employing 
classes  embraced  in  an  initial  scheme,  but  for  other  and 


141 

perhaps  financially  weaker  classes,  to  whom,  in  justice  to 
their  workmen,  its  extension  may  be  expedient. 

A  speedy  settlement  of  disputed  claims. 

A  framing  of  the  statute  that  will  discourage  malinger- 
ing, and  a  medical  service  that  will  deal  adequately  with 
disputes  respecting  the  fact  or  degree  of  injury. 

An  opportunity  for  insurance  so  that  the  workman 
shall  be  assured  of  his  just  dues  and  the  master  enabled 
to  distribute  his  risk.  And  insurance  by  the  master  in  an 
approved  institution  should  shift  his  obligation. 

Coming  to  the  law  of  the  constitution,  and  consider- 
ing first  the  question  of  jurisdiction,  I  am  of  the  opinion 
that  the  Federal  Government  is  quite  as  incompetent  to 
enact  a  compensation  scheme  for  any  class  of  workmen 
Avithin  a  State — excepting,  of  course,  federal  employees^ — 
as  it  would  be  to  undertake  local  poor  relief.  And,  con- 
stitutional obstacles  apart,  federal  intervention  could 
only  make  mischief — a  mischief  already  done  to  a  degree 
by  the  federal  Employers'  Liability  Law.  Workmen's 
compensation  is  practically  as  well  as  legally  a  matter  for 
the  States  so  far  as  state  territory  is  concerned. 

Considering  the  constitutional  powers  of  the  States 
in  respect  of  a  compulsory  compensation  scheme,  it  ap- 
pears that  certainly  in  some  States,  and  perhaps  in  many 
if  not  all  others,  a  requirement  of  trial  by  jury  will 
inject  the  slow  and  costly  process  of  suits  at  law  into  a 
scheme  where  a  speedy  and  cheap  procedure  is  of  prime 
importance. 

Furthermore,  each  State,  being  forbidden  to  deny  any- 
one "the  equal  protection  of  the  laws,''  is  obliged  to  adopt 
for  all  workmen  affected  a  uniform  basis  of  compensation ; 
and  the  rule  that  classifications  shall  be  reasonable  and 
not  arbitrary,  while  not  a  bar  to  a  working  scheme,  will 
require  most  skillful  drafting  in  order  to  respect  its 
obligation. 


142 

That  constitutional  requirements  will  at  least  em- 
barrass a  compulsory  compensation  scheme  is  generally 
conceded.  More  importantly,  there  is,  even  among-  intelli- 
gent sympatliizers,  a  widespread  uncertainty  and  unbelief 
as  to  the  validity  of  its  A^ery  basis — masters'  responsi- 
bility for  injury  regardless  of  fault. 

Considering  this  vital  question,  I  am  of  the  opinion 
tliat,  from  a  constitutional  standpoint,  a  master's  respon- 
sibility can  no  more  be  made  to  depend  on  the  nature  of 
his  industry  than  on  the  size  of  his  bank  account. 
Whether  the  employment  be  safe,  hazardous  or  extra  haz- 
ardous, injury  to  the  servant  is  the  vital  fact — the  in- 
evitable point  of  departure  for  all  legal  reasoning. 

To  hold  otherwise  would  give  a  preference  abhorrent 
to  our  rule  of  equality  before  the  law.  We  cannot  say 
that  one  maimed  by  a  sc^'the  is  constitutionaily  barred 
from  a  relief  that  may  be  lawfully  given  one  maimed  by 
a  locomotive  or — a  more  glaring  prejudice  already  con- 
templated— to  one  injured  while  merely  employed  by  a 
concern  operating  locomotives.  The  fact  that  the  man 
with  the  scythe  is  not  "organized''  may  account  for  his  not 
demanding  relief,  but  it  does  not  affect  his  position  in 
law.  I  am  far  from  maintaining  that  a  scheme  must 
at  once  embrace  all  servants.  I  do  not  anticipate  its 
ultimate  extension  to  all  as  inevitable,  but  certainly  its 
principle  must  be  potentially  comprehensive.  In  short, 
if  the  principle  of  compulsory  compensation  is  constitu- 
tional it  must,  potentially,  be  applicable  for  the  benefit  of 
any  servant  and  imposable  upon  any  master. 

But  I  am  of  the  opinion  that  the  principle  is  uncon- 
stitutional— that  an  American  legislature  cannot  law- 
fully require  a  master  to  pay  a  fixed  compensation  to  a 
servant  injured  in  his  employ  without  regard  to  the  cause 
of  injury. 

If  compulsory  compensation  is  barred  by  constitu- 
tional limitation  a  large  measure  of  systematic  compen- 


143 


satioii  may  be  attained  by  voluntary  methods.  Indeed, 
even  if  compulsion  be  lawful,  the  voluntary  method  is 
preferable.  Our  faculty  of  business  organization  would 
thus  be  employed  in  a  most  beneficial  kind,  of  social 
work.  Under  this  method  alone  could  we  utilize  to  the 
best  advantage  the  principle  of  that  admirable  foreign 
invention — the  German  employers'  association. 

Legislatures  should  persuade  to  this  course  by  relieving 
employers  who  shall  adopt  satisfactory  methods  from 
being  mulcted  in  damages  for  accidents  except  Avhere  they 
are  grossly  in  fault.  This  assurance  should  greatly  promote 
the  voluntary  method  which  is  already  gaining  ground 
tlirough  its  own  merits.  It  is  demonstrable — nay,  it  is 
demonstrated  abroad — that  modern  business  organization 
is  competent  to  administer  broad  compensation  systems 
witli  benefit  to  all  concerned,  especially  by  distributing 
the  responsibility  and  the  risk  by  means  of  association. 

Whatever  the  ultimate  disposition  of  the  constitu- 
tional problems,  the  plans  of  the  States  that  are  seriously 
considering  compulsory  compensation  should  show  a  rea- 
sonable uniformity,  of  which  there  is  no  sign  at  present, 
and  a  more  careful  drafting  than  is  disclosed  in  the  sev- 
eral laws  already  enacted. 

Carman  F.  Randolph. 
New  York,  November,  1910. 


t904E] 


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ALL  BOOKS  MAY  BE  RECALLED  AFTER  7  DAYS 
2-month  loans  may  be  renewed  by  calling 

(415)  642-6753 
1-year  loans  may  be  recharged  by  bringing  books 

to  NRLF 
Renewals  and  recharges  may  be  made  4  days 

prior  to  due  date 

DUE  AS  STAMPED  BELOW 


MAY  2  0  1992 


APR     6  1994 


I.Ky      OJ04 


239414 


/^I}  7S/4- 


